Comet Group Consolidated Financial Statements · Comet Group Consolidated Financial Statements....

Consolidated Financial Statements34

35 Consolidated statement of income 35 Consolidated statement of comprehensive income 36 Consolidated balance sheet 37 Consolidated statement of cash flows 38 Consolidated statement of changes in equity 39 Notes to the consolidated financial statements 93 Report of the statutory auditor

The complete 2019 consolidated financial statements (including the notes) are also available online at www.comet-group.com/en/investors

Contents

Comet Group Consolidated Financial Statements

Comet Holding AG 35Consolidated Financial Statements

In thousands of CHF Note 2019 % 2018 restated 1

%

Net sales 3, 4 371,606 436,356

Cost of sales (228,763) (265,274)

Gross profit 142,843 38.4% 171,082 39.2%

Other operating income 5 5,051 1.4% 4,201 1.0%

Development expenses 7 (48,693) – 13.1% (53,881) – 12.3%

Marketing and selling expenses (49,843) – 13.4% (63,188) – 14.5%

General and administrative expenses (29,419) – 7.9% (32,848) – 7.5%

Loss on disposal of businesses 8 – – (6,595) – 1.5%

Operating income 19,939 5.4% 18,771 4.3%

Financing expenses 2.4, 10 (6,738) – 1.8% (7,003) – 1.6%

Financing income 2.4, 10 2,162 0.6% 3,484 0.8%

Income before tax 15,363 4.1% 15,251 3.5%

Income tax 11 (3,336) – 0.9% (2,904) – 0.7%

Net income 12,027 3.2% 12,347 2.8%

Earnings per share in CHF, diluted and basic 12 1.55 1.59

Operating income 19,939 5.4% 18,771 4.3%

Amortization 9 4,602 1.2% 10,655 2.4%

EBITA 24,541 6.6% 29,426 6.7%

Depreciation 9 15,433 4.2% 13,540 3.1%

EBITDA 39,974 10.8% 42,966 9.8%

1 Restated for IFRS 16 (see note 2.2).

Consolidated statement of comprehensive income

In thousands of CHF Note 2019 2018 restated 1

Net income 12,027 12,347

Other comprehensive income

Foreign currency translation differences (2,286) (1,684)

Total items that will be reclassified to the income statement on realization (2,286) (1,684)

Actuarial losses on defined benefit plans 25 (3,425) (913)

Income tax 11 361 132

Total items that will not subsequently be reclassified to the income statement (3,064) (781)

Total other comprehensive income (5,350) (2,465)

Total comprehensive income 6,677 9,881


Consolidated statement of income


In thousands of CHF Note Dec. 31, 2019 % Dec. 31, 2018 restated 1

% Jan. 1, 2018 restated 1

AssetsCash and cash equivalents 60,255 43,007 60,420

Trade and other receivables 13 62,627 63,943 64,574

Other financial assets 14 271 26 277

Tax receivables 609 2,893 2,660

Inventories 15 85,184 91,090 102,825

Prepaid expenses 16 8,296 5,109 4,555

Total current assets 217,243 55.5% 206,068 54.2% 235,311

Property, plant and equipment 17 115,702 113,591 95,056

Right-of-use assets 18 11,682 12,055 14,274

Intangible assets 19 38,318 40,827 51,647

Financial assets 14 367 209 239

Deferred tax assets 11 8,397 7,516 8,053

Total non-current assets 174,467 44.5% 174,198 45.8% 169,269

Total assets 391,710 100.0% 380,266 100.0% 404,580

Liabilities and shareholders’ equityCurrent debt 21 12,000 5,000 2,000

Current lease liabilities 18 4,635 4,469 4,126

Trade and other payables 22 36,609 34,919 42,545

Contract liabilities 3 28,273 19,992 29,171

Other financial liabilities 14 41 379 2

Tax payables 2,480 869 3,131

Accrued expenses 23 18,470 20,407 25,758

Current provisions 24 9,346 12,080 10,140

Total current liabilities 111,853 28.6% 98,115 25.8% 116,873

Non-current debt 21 59,893 62,812 65,733

Non-current lease liabilities 18 8,754 9,694 12,645

Non-current provisions 24 11 47 54

Employee benefit plan liabilities 25 15,250 11,307 8,438

Deferred tax liabilities 11 – – 1,137

Total non-current liabilities 83,909 21.4% 83,859 22.1% 88,007

Total liabilities 195,762 50.0% 181,974 47.9% 204,880

Capital stock 26 7,764 7,760 7,754

Additional paid-in capital 11,184 18,496 29,303

Retained earnings 203,277 196,027 184,950

Foreign currency translation differences (26,277) (23,991) (22,307)

Total equity attributable to shareholders of Comet Holding AG 195,948 50.0% 198,292 52.1% 199,700

Total liabilities and shareholders’ equity 391,710 100.0% 380,266 100.0% 404,580


Consolidated balance sheet


In thousands of CHF Note 2019 2018 restated 1

Net income 12,027 12,347

Income tax 11 3,336 2,905

Depreciation, amortization and impairment 9 20,035 24,195

Net interest expense 10 1,890 1,555

Share-based payments 30 301 340

Losses on disposal of property, plant and equipment 94 172

Losses on disposal of intangible assets – 10

Loss on disposal of businesses 8 – 6,595

Other non-cash expense or (income) 1,044 3,126

Change in provisions 24 (2,563) 2,262

Change in other working capital 12,575 (19,936)

Taxes paid (50) (5,845)

Net cash provided by operating activities 48,688 27,727

Outflow from disposal of businesses – (293)

Purchases of property, plant and equipment 17 (16,419) (26,020)

Purchases of intangible assets 19 (2,202) (1,933)

Disposals of property, plant and equipment 17 99 242

Disposals of intangible assets 19 – 1,039

Purchase/disposals of other financial assets (163) 35

Net cash (used in) investing activities (18,685) (26,930)

Proceeds from bank debt 21 5,000 –

Repayment of debt 21 (1,000) –

Repayment of lease liabilities 18 (4,867) (4,699)

Interest received 108 30

Interest paid (1,901) (1,505)

Distribution to shareholders of Comet Holding AG 33 (9,312) (11,630)

Net cash (used in) financing activities (11,972) (17,805)

Net increase/(decrease) in cash and cash equivalents 18,031 (17,008)

Foreign currency translation differences on cash and cash equivalents (784) (404)

Net cash and cash equivalents at January 1 43,007 60,420

Net cash and cash equivalents at December 31 60,255 43,007


Consolidated statement of cash flows


Equity attributable to shareholders of Comet Holding AG

In thousands of CHF Note Capital stock

Additional paid-in capital

Retained earnings

Foreign currency translation differences

Total share-holders’ equity

December 31, 2017 7,754 29,303 186,748 (22,257) 201,548

Restatement 1 – – (1,798) (50) (1,848)

January 1, 2018 restated 1 7,754 29,303 184,950 (22,307) 199,700

Net income 12,347 12,347

Other comprehensive income (781) (1,684) (2,465)

Total comprehensive income 11,566 (1,684) 9,881

Distribution to shareholders of Comet Holding AG 33 (11,630) (11,630)

Increase in capital (for stock compensation) 26 6 823 (909) (80)

Share-based payments 30, 31 421 421

December 31, 2018 7,760 18,496 196,027 (23,991) 198,292

Net income 12,027 12,027

Other comprehensive income (3,064) (2,286) (5,350)

Total comprehensive income 8,963 (2,286) 6,677

Distribution to shareholders of Comet Holding AG 33 (7,760) (1,552) (9,312)

Increase in capital (for stock compensation) 26 4 448 (503) (51)

Share-based payments 30, 31 342 342

December 31, 2019 7,764 11,184 203,277 (26,277) 195,948


Consolidated statement of changes in equity


The Comet Group (“Comet”, the “Group”) is one of the world’s leading vendors of x-ray, radio frequency (RF) power and ebeam technology. With high-quality components, systems and services, marketed under the “Comet”, “Yxlon” and “ebeam” brands, the Group helps its custom-ers optimize the quality, reliability and efficiency of their products and processes. Yxlon x-ray systems for non-destructive testing are supplied to end customers in the automotive, aerospace, electronics and energy sectors. Under the Comet brand, the Group builds components and modules such as x-ray sources, vacuum capacitors, RF generators and impedance matching networks, marketed to manufacturers in the automotive, aerospace, semiconductor and solar industries as well as the security sector. Under the ebeam brand, the Group develops and markets compact ebeam sets for the treatment of surfaces in the food and printing industries.

The consolidated financial statements (except with respect to certain financial instruments) have been drawn up under the historical cost convention. The fiscal year-end for the financial statements of all Group companies is December 31. These consolidated financial state-ments have been prepared in compliance with Swiss stock corporation law and International Financial Reporting Standards (IFRS). All IFRS in force at the balance sheet date and all interpretations (IFRIC) of the International Accounting Standards Board (IASB) were applied. Comet did not early-adopt new standards and interpretations unless specifically stated. The significant accounting policies applied are un-changed from the prior year except as set out below.

As a result of rounding and the presentation in thousands of Swiss francs, totals in the consolidated financial statements may not add.

Revised and new accounting rules With effect from January 1, 2019, Comet has applied the following new or adjusted IFRS / IFRIC for the first time: • IFRS 16 – Leases • IAS 19 – Employee Benefits (amendment): Plan Amendment, Curtailment or Settlement

• IFRIC 23 – Uncertainty over Income Tax Treatments • Annual Improvements to IFRSs, 2015-2017 Cycle

Except for IFRS 16, Leases, the new or amended standards and inter-pretations had no material effect on the Group’s financial position, results of operations and cash flows.

IFRS 16, which replaces IAS 17, contains accounting rules for all leases. Under the new guidance, lessees are required to recognize most leases on their balance sheet and employ a right-of-use model to do so. Un-der this new model, at the inception of the lease, the lessee recognizes a right-of-use asset for the usage right, and a liability for the payment obligation to the lessor. The scope of IFRS 16 excludes contracts that are within the scope of other IFRS standards, and those which were already treated as finance leases under IAS 17 and IFRIC 4.

1 Nature of the business activities

2 Accounting policies

2.1 Changes in accounting policies

2.2 IFRS 16 – Leases

Notes to the consolidated financial statements


Comet has elected to use the full retrospective approach for the adoption of IFRS 16. In the initial application of the new standard, the Group has made use of the practical expedient of applying IFRS 16 only to those arrangements which were already classified as leases under IAS 17 and IFRIC 4. Comet is affected by the new accounting guidance especially in its rental agreements for the use of buildings and in its vehicle leases.

The impacts of the retrospective application of the new standard on the consolidated income statement, balance sheet and cash flow statement for the comparative periods are presented in table form in the following overview.

Effect on items of the consolidated statement of income:

In thousands of CHF Year to December 31, 2018Reported Adjustment Restated

Net sales 436,356 – 436,356

Cost of sales (265,914) 640 (265,274)

Gross profit 170,442 640 171,082

Other operating income 4,201 – 4,201

Development expenses (53,882) – (53,881)

Marketing and selling expenses (63,251) 63 (63,188)

General and administrative expenses (32,953) 105 (32,848)

Loss on disposal of businesses (6,595) – (6,595)

Operating income 17,962 809 18,771

Financing expenses 1 (6,308) (695) (7,003)

Financing income 1 3,484 – 3,484

Income before tax 15,137 114 15,251

Income tax (2,858) (46) (2,904)

Net income 12,279 68 12,347

Operating income 17,962 809 18,771

Depreciation, amortization and impairment 19,831 4,364 24,195

EBITDA 37,793 5,173 42,966

1 Adjusted (see note 2.4).


The effect on the consolidated statement of comprehensive income is immaterial.

Effect on items of the consolidated balance sheet:

In thousands of CHF January 1, 2018 December 31, 2018Reported Adjustment Restated Reported Adjustment Restated

AssetsTotal current assets 235,311 – 235,311 206,068 – 206,068

Property, plant and equipment 95,056 – 95,056 113,591 – 113,591

Right-of-use assets – 14,274 14,274 – 12,055 12,055

Deferred tax assets 7,536 517 8,053 7,063 453 7,516

Other assets, not affected by IFRS 16 51,886 – 51,886 41,036 – 41,036

Total assets 389,789 14,791 404,580 367,759 12,507 380,266

LiabilitiesCurrent debt 2,000 – 2,000 5,000 – 5,000

Current lease liabilities 132 3,994 4,126 – 4,469 4,469

Total accrued expenses 25,758 – 25,758 20,316 91 20,407

Non-current debt 65,733 – 65,733 62,812 – 62,812

Non-current lease liabilities – 12,645 12,645 – 9,694 9,694

Other liabilities, not affected by IFRS 16 94,618 – 94,618 79,593 – 79,593

Total liabilities 188,241 16,639 204,880 167,721 14,253 181,974

EquityRetained earnings 186,748 (1,798) 184,950 197,758 (1,731) 196,027

Foreign currency translation differences (22,257) (50) (22,307) (23,976) (15) (23,991)

Other equity, not affected by IFRS 16 37,057 – 37,057 26,256 – 26,256

Total equity 201,548 (1,848) 199,700 200,038 (1,746) 198,292

Effect on items of the consolidated statement of cash flows:

In thousands of CHF Year to December 31, 2018Reported Adjustment Restated

Net income 12,279 68 12,347

Change in net cash provided by operating activities 10,184 5,225 15,410

Net cash provided by operating activities 22,463 5,264 27,727

Net cash (used in) investing activities (26,930) – (26,930)

Net cash (used in) financing activities (12,542) (5,264) (17,805)

Net decrease in cash and cash equivalents (17,008) – (17,008)

Foreign currency translation differences on cash and cash equivalents (404) – (404)

Net cash and cash equivalents at January 1 60,420 – 60,420

Net cash and cash equivalents at end of period 43,007 – 43,007


Impact of initial application of IFRS 16The initial application of IFRS 16 led to changes in the composition of the consolidated balance sheet and in the reporting and classifica-tion of items in the consolidated statements of income and of cash flows. Right-of-use assets under leases are now reported separately in non-current assets. The lease liabilities are recognized according to their maturity. Under IFRS 16, the recognition of lease expenses is replaced by a depreciation charge on the right-of-use assets and by interest expense on the lease liabilities. The depreciation on the right-of-use assets leads to an increase in operating cash flow. At the same time, the repayments of the lease liabilities give rise to a cash outflow from financing activities.

For Comet, the initial retrospective application at January 1, 2018 resulted in the recognition of CHF 14.3 million in right-of-use assets from leases and CHF 16.6 million in lease liabilities. At December 31, 2018, the right-of-use assets from leases were CHF 12.1 million and the lease liabilities were CHF 14.2 million. The full retrospective method has the effect of “front-loading” the expenses, i.e., of shifting them to an earlier point in time, compared to the treatment of operating leases under IAS 17. Depreciation is generally applied on a straight-line basis over the term of the lease, while the interest expense declines with the amortization of the lease liability over time. For Comet, at January 1, 2018, this effect led to a reduction of CHF 1.8 million in retained earnings (at December 31, 2018, the effect was a reduction of CHF 1.7 million). This effect also led to the recognition of a deferred tax asset of CHF 0.5 million at January 1, 2018 and at December 31, 2018. For the period from January 1 to December 31, 2018, the appli-cation of IFRS 16 resulted in an increase of CHF 5.2 million in EBITDA (with an increase of 1.2 percentage points in EBITDA margin). In the statement of cash flows for fiscal 2018, the effect was an increase of CHF 5.3 million both in net cash provided by operating activities and in net cash used in financing activities.

Initial recognition of leasesAt the inception of every contract, Comet assesses whether it contains a lease. A lease exists only if the contract gives Comet the right of use to an asset for a period of time and substantially all of the eco-nomic benefit from the asset accrues to Comet. For all leases, Comet separates lease components from non-lease components. No assets and liabilities are recognized for leases with a term of one year or less and for leases of low-value assets (with a value when new of less than CHF 5,000); the expenses for these are recognized directly in the income statement.

The initial measurement of the right of use for a leased asset is made at the inception of the lease by calculating the present value of the lease payments, plus initial direct costs, plus estimated costs for dismantling, removal and restoration (if contractually required), less lease incentives received.


The time of lease inception is as a rule taken to be the start date of the contract, unless there are sound reasons for regarding a different date as more appropriate. The useful life is deemed to be the period for which Comet has enforceable rights and obligations with respect to the leased asset. The useful life may be affected by options. The right-of-use asset is depreciated over the shorter of the term of the lease or the useful life of the underlying assets.

Lease payments are either agreed fixed amounts, or contain variable elements linked to an index (for example, a reference rate of interest for mortgages). Comet primarily has leases with fixed payments, which includes leases with rent-free periods and ones with rising pay-ments. Leases with variable payments are immaterial.

Options and modificationsComet’s leases have different extension options, which can be summarized as follows: • Non-permanent leases with time-limited extension options • Indefinite leases with active or passive (automatic) exercise of the extension options

Options are included in the calculation only if, taking into account all significant determining factors, they are considered highly likely to be exercised. For indefinite leases, the following principles apply (the extension periods cited are from the lease inception or from the expiry of the minimum lease term): • For buildings and warehouses, a maximum extension of three years is assumed.

• For plant and equipment, a maximum extension of two years is assumed.

• For vehicles and other tangible assets, a maximum extension of one year is assumed.

Exceptions to these policies are made only when there is sound evidence in support of doing so.

In the event of a material change during the term of a lease, Comet remeasures the lease liability at the date of the change. Adjustments to the lease liability are deducted from or added to the corresponding right-of-use asset. Any difference remaining upon early termination of a lease is derecognized through profit or loss.

In the initial application of IFRS 16, Comet treated all extension options relating to leases in force at January 1, 2018 as having been exercised and included them in the present value calculation at the inception of the respective lease.


Discount rateFor discounting the lease payments, Comet uses the interest rate im-plicit in the lease, or the incremental borrowing rate if the implicit rate cannot be determined. The incremental borrowing rate (IBR) is deter-mined by reference to a risk-free bond from the currency area where the underlying leased asset is located. Moreover, the determination of the IBR takes into account the start year of the lease as well as the lease term. In arriving at the IBR, Comet considers its own credit risk. This is quantified as the average of the risk premiums of interest-bear-ing debt financing obtained in the recent past. The calculation of the incremental borrowing rate is updated at regular intervals or when a material event requires it.

Impairment testComet applies IAS 36, which prescribes the periodic impairment test-ing of all cash generating units. As Comet’s leases in themselves do not represent cash generating units, they are assigned to the higher-level unit for the purpose of impairment testing.

The rights of use are tested for impairment when there is an indication that they may be impaired. Further information on the impairment test is provided in the section “Measurement and recognition policies” (note 2.7) and in note 20.

Standard Expected impact

Effective date Planned adoption by Comet

IFRS 3 - Business Combinations (amendment): Definition of a Business (1) Jan. 1, 2020 Fiscal year 2020

IAS 1 - Presentation of Financial Statements (amendment): Definition of Material (1) Jan. 1, 2020 Fiscal year 2020

IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors (amendment): Definition of Material (1) Jan. 1, 2020 Fiscal year 2020

IFRS 7 - Financial Instruments: Disclosures (amendment): Interest Rate Benchmark Reform (1) Jan. 1, 2020 Fiscal year 2020

IFRS 9 - Financial Instruments (amendment): Interest Rate Benchmark Reform (1) Jan. 1, 2020 Fiscal year 2020

(1) Expected to have no, or no significant, impact on the financial position, results of operations and cash flows.

2.3 New accounting rules becoming effective in subsequent periods


Foreign currency translation gains and losses arising on the same position are no longer presented in gross terms but net. This change applies, for example, to unrealized translation gains or losses on loans held in foreign currency. The change makes the reported financing ex-pense and income more meaningful and easier to understand, and has no impact on the Group’s earnings. The comparative data have been restated as follows:

Fiscal year 2018 1

Reported Change in presentation

Adjusted

Interest expense 1,585 – 1,585

Losses on derivatives used for currency hedging 1,702 – 1,702

Foreign currency translation losses 6,794 (3,078) 3,716

Total financing expenses 10,081 (3,078) 7,003

Interest income 30 – 30

Gains on derivatives used for currency hedging 647 – 647

Foreign currency translation gains 5,885 (3,078) 2,807

Total financing income 6,562 (3,078) 3,484


Comet’s consolidated financial statements contain assumptions and estimates that affect the reported financial position, results of opera-tions and cash flows. These assumptions and estimates were made on the basis of management’s best knowledge at the time of preparation of the accounts. Actual results may differ from the values presented. The following estimates have the greatest effects on the consolidated financial statements:

• Intangible assets (see note 19 and 20): For acquisitions, the fair value of the acquired net assets (including acquired intangible assets) is estimated. Any amount paid in excess of this estimate represents goodwill. Intangible assets with a finite life are written off over the expected period of use; those with an indefinite life (primarily good-will and rights to trademarks and names) are not amortized but are tested annually for impairment. Especially in the determination of the value in use of goodwill and rights to trademarks and names, differences between assumed and actual outcomes could lead to changes in the results of impairment testing. The assumptions con-cerning the achievable margins and the growth rates have a signifi-cant impact on impairment test outcomes. The valuation of goodwill and other intangibles, as well as the estimation of useful life, have an effect on the consolidated financial statements.

• Provisions (see note 24) are, by definition, liabilities of uncertain amount. Future events can thus lead to adjustments that affect income.

2.4 Changes in presentation

2.5 Estimates


• Deferred tax assets (see note 11) are recognized only if it is likely that taxable profits will be earned in the future. The tax planning is based on estimates and assumptions as to the future profit trajectories of the Group companies that may later prove incorrect. This can lead to changes with an effect on income.

• Employee benefit plans (see note 25): The Group operates employ-ee benefit plans for its staff that are classified as defined benefit plans under IFRS. These defined benefit plans are valued annually, which requires the use of various assumptions. Differences between the actual outcomes and the assumptions, particularly as to the discount rate for future obligations and as to life expectancy, may have effects on the valuation of plan assets and thus on the financial position of the Group. The impact of the most important parameters on the net present value of the obligation is presented in note 25.

There were no changes in the basis of consolidation from the prior year. The consolidated financial statements comprise the accounts of the companies listed below.

Company Registered office Equity interest in %

2019 2018

Comet Holding AG Flamatt, Switzerland 100% 100%

Comet AG Flamatt, Switzerland 100% 100%

Comet Electronics (Shanghai) Co. Ltd. Shanghai, China 100% 100%

Comet Mechanical Equipment (Shanghai) Co. Ltd. Shanghai, China 100% 100%

Comet Technologies USA, Inc. Shelton, CT, USA 100% 100%

Comet Technologies Korea Co. Ltd. Suwon, Korea 100% 100%

Yxlon International GmbH Hamburg, Germany 100% 100%

Yxlon International A/S Taastrup, Denmark 100% 100%

Yxlon International KK Yokohama, Japan 100% 100%

Yxlon (Beijing) X-Ray Equipment Trading Co. Ltd. Beijing, China 100% 100%

The consolidated financial statements represent the aggregation of the annual accounts of the individual Group companies, which are pre-pared using uniform accounting principles. Those companies controlled by Comet Holding AG are fully consolidated. This means that these companies’ assets, liabilities, equity, expenses and income are entire-ly included in the consolidated financial statements. All intragroup balances and transactions, unrealized gains and losses resulting from intragroup transactions, and dividends are eliminated in full.

2.6 Consolidation

2.6.1 Basis of consolidation

2.6.2 Method of consolidation


Acquisitions and goodwillCompanies are consolidated from the date on which effective control passes to the Group. Consolidation ends only when effective control ceases. On acquisition, the identifiable assets, liabilities and contin-gent liabilities are measured at fair value and included in the accounts using the acquisition method. For acquisitions, intangible assets that arise from a contractual or legal right or are separable from the busi-ness entity, and whose fair value can be measured reliably, are report-ed separately. Goodwill, being the excess of the aggregate consider-ation transferred over the fair value of the net assets of the acquired subsidiary, is initially measured at cost. If the aggregate consideration transferred is lower than the fair value of the acquired net assets, the difference is recognized as negative goodwill in other operating income at the acquisition date. Goodwill and other intangible assets are allocated on acquisition to those companies expected to benefit from the acquisition or to generate future cash flows as a result of it. When Group companies are sold, the difference between their sale price and their net assets, plus accumulated currency translation differences, is recognized as operating income in the consolidated statement of income.

Foreign currency translationThe functional currency of the Group companies is the respective national currency. Transactions in a currency other than the functional currency are translated at the exchange rate prevailing at the transac-tion date. Financial assets and liabilities are translated at the balance sheet date at the exchange rate as of that date; the resulting curren-cy translation differences are reported in the income statement. The consolidated financial statements are presented in Swiss francs. The financial statements of the Group companies are translated at the average exchange rates for the year (the “average rate” in the table below) for the income statement and at year-end rates (the “closing rate”) for the balance sheet. The resulting currency translation differ-ences are recognized in other comprehensive income. Currency trans-lation differences from intragroup loans for the long-term financing of Group companies are also recognized in other comprehensive income, to the extent that repayment is neither planned nor is likely to occur in the foreseeable future.

The exchange rates used to translate the most important currencies are listed below:

Closing rate Average rate

Country or region Dec. 31, 2019 Dec. 31, 2018 2019 2018

USA USD 1 0.968 0.985 0.994 0.978

Eurozone EUR 1 1.085 1.126 1.113 1.155

China CNY 1 0.139 0.143 0.144 0.148

Japan JPY 100 0.891 0.894 0.912 0.886

Denmark DKK 1 0.145 0.151 0.149 0.155

Republic of Korea KRW 1,000 0.838 0.885 0.853 0.889


Revenue recognition (sales and other income)Net sales represent the revenue from the sale of goods and services to third parties, net of rebates and other price reductions. The Group’s revenue is derived from the sale of goods (including spare parts) by the PCT, IXT and EBT divisions and the sale of systems (including ser-vices such as installation) by the IXS division. Revenue from the sale of goods, including also spare parts, systems and system-related ser-vices, is as a rule recognized on the basis of a single performance obli-gation, which is satisfied at a specific point in time. The performance obligation is satisfied, and the revenue recognized, when the customer acquires control of the product or service. In the sale of goods that are not systems, the transfer of control generally occurs at the time of delivery. Performance obligations for system sales (including for installation) are fulfilled at the time of acceptance by the customer. In connection with both non-system goods and with systems, Comet also offers services. Warranty obligations for providing an additional service to the customer (service-type warranties), such as an exten-sion of the warranty period, are separate performance obligations and the revenue associated with them is recognized over time. For general maintenance services and defect correction intended to ensure that the delivered good is, or performs, as specified in the contract (assur-ance-type warranties), the estimated cost of the liability is recognized as a provision in accordance with IAS 37.

Customer contributions to development projects and payments for the delivery of the respective first prototype are recorded in other operating income; subsequent deliveries of prototypes are reported as sales.

Variable price elements (variable consideration) exist both in retro-active rebates when the quantity of products purchased exceeds a certain threshold in the calendar year, and in individual discounts on products. The amount of the rebate is estimated using the most- likely-amount method and as a rule is allocated proportionately to all performance obligations under the contract.

Sales commissions owed for agent activities are capitalized at con-tract inception as incremental costs attributable to obtaining a contract and a liability of equal amount is recognized for sales com-missions. Their recognition as an expense occurs as soon as Comet has transferred control of the products to the customer. No interest effect is recognized for contract liabilities and prepayments by customers, as the period between the time of transfer of a promised good or service to the customer and the time of payment is not more than one year.

Financial assets and liabilitiesFinancial assets are initially measured at fair value (market value), including transaction costs, except in the case of financial assets cat-egorized as at fair value through profit or loss, for which transaction costs are recorded directly in financing expenses. All purchases and sales of financial assets are recognized at the transaction date.

2.7 Measurement and recognition policies


• Financial items at fair value through profit or loss: These include all derivatives, trading positions, and certain financial assets and liabilities designated as falling into this category. These assets are recognized at fair value in the balance sheet. Changes in value are reported as financing income or expense in the reporting period in which they occur.

• Financial items at amortized cost: These are measured at cost using the effective interest method.

Fair value is determined based on quoted or other market prices. In the fiscal year as in the prior year, no hedge accounting under IFRS 9 or IAS 39 was applied to any hedging transactions. Financial assets are recognized as soon as Comet acquires control of them, and derecog-nized when it ceases to have control, i.e., when it has sold the rights or they have lapsed. Financial liabilities are derecognized when the obli-gation specified in the contract is discharged or is canceled or expires.

Cash and cash equivalentsIn addition to cash on hand and balances in checking accounts at banks, cash and cash equivalents can also include fixed-term deposits with original maturities of up to three months.

Trade and other receivables and contract assetsTrade receivables, other receivables and contract assets are report-ed at their face value less any necessary impairment charges. Comet provides for impairment using the simplified approach by recognizing an allowance in the amount of the losses expected over the remaining life of the instruments (known as the expected credit loss model). For specific doubtful arrears with objective indications of impairment, impairment charges are applied individually.

Whether a receivable or a contract asset is recognized is governed by whether the right to consideration is unconditional (leading to recogni-tion of a receivable) or conditional (leading to recognition of a contract asset).

InventoriesInventories are recorded at the lower of cost and net realizable value. Net realizable value represents the estimated normal sale price less the costs of completion, marketing, selling and distribution. Raw materials and purchased products are measured using the weight-ed-average method; internally produced goods are measured at target costs. Inventories include proportionate shares of production over-heads.

Property, plant and equipmentProperty, plant and equipment are stated at cost less accumulated depreciation and impairment. Borrowing costs related to qualifying assets form part of the historical cost. Depreciation is provided on a straight-line basis over the estimated useful life of the assets. The expense for depreciation of property, plant and equipment is recog-nized in the income statement under that expense category which corresponds to the function of the particular asset in the Group. Land values are not depreciated. Impairment charges are recognized as a


separate line item under accumulated depreciation and impairment. Maintenance costs are recognized as assets only if the maintenance extends the expected life of the asset, expands production capacity or otherwise increases asset values. The cost of maintenance and repair that do not increase asset values is charged directly to income. The fol-lowing estimated useful lives are applied in determining depreciation:

Buildings 20 – 40 years

Plant and equipment 6 – 10 years

Other tangible assets 3 – 10 years

Intangible assetsThe intangible assets recognized are goodwill, rights to trademarks and names, customer lists, technology, licenses, patents, and soft-ware. Intangible assets are recognized at cost and generally amortized on a straight-line basis over their expected useful life. Goodwill and acquired rights to trademarks and names are not amortized but are tested annually for impairment (see section “Impairment of non-cur-rent assets”). The expense for amortization of intangible assets with finite useful lives is recognized in the income statement under that expense category which corresponds to the function of the particular asset in the Group. The following estimated useful lives are applied in determining amortization:

Customer lists 10 – 15 years

Technology 5 – 10 years

Computer software 3 – 5 years

ProvisionsProvisions are recognized only where Comet has a present obliga-tion to a third party arising from a past event and the amount of the obligation can be estimated reliably. No provisions are recognized for possible losses that may result from future events.

Provisions are classified as current to the extent that the related cash outflows are expected to occur within one year from the balance sheet date. Conversely, the cash outflows in respect of non-current provisions are expected to occur more than twelve months after the balance sheet date. If the interest effect is material, the cash outflows are discounted.

Post-employment benefits Comet maintains post-employment benefit plans for its employees which differ according to the local circumstances of the individual Group companies. The benefit plans are financed by contributions to benefit arrangements that are separate legal entities (foundations or insurance companies) or by the accumulation of reserves in the balance sheet of the respective Group company. In the case of de-fined contribution plans or economically equivalent arrangements, the expenses accrued in the reporting period represent the agreed contri-butions of the Group company. For defined benefit plans, the service costs and the present value of the defined benefit obligation are


calculated in actuarial valuations by independent experts, using the projected unit credit method. The calculations are updated annually. The surplus or deficit recognized in the balance sheet is equal to the present value of the defined benefit obligation as determined by the actuary, less the fair value of plan assets. Any resulting net surplus is recognized as an asset only to the extent of the potential economic benefit that may be realized from this asset in the future, taking into consideration IFRIC 14. The expense charged to income is the actu-arially determined service cost plus the net interest cost. Actuarial gains and losses are recognized in other comprehensive income. They comprise experience adjustments (the effects of differences between the previous actuarial assumptions and the observed outcomes) and the effects of changes in actuarial assumptions (particularly regarding the discount rate and life expectancy).

Long-term employee benefitsComet grants length-of-service awards to its employees after a cer-tain number of years of service, in the form of lump-sum payments that increase in amount with the number of years of employment. Comet calculates the resulting obligation using the projected unit credit method. The calculation is updated annually. Any actuarial gains or losses from the remeasurement are immediately taken to income.

Share-based paymentsPart of the variable compensation of the members of the Executive Committee under the short-term incentive plan (STIP), and part of the fixed compensation of the Board of Directors, is paid in stock. In addition, the Executive Committee is granted stock under a long-term incentive plan (LTIP). The expense is recognized at the value of the stock earned, measured at the quoted market price (fair value) at the grant date. The amount accrued for those components of compensa-tion which must be equity-settled (i.e., for which there is no option of cash payment) is recognized directly in equity. For components which the beneficiary can choose to receive in equity or in cash, the value of the option which this choice represents is determined and recognized as an increase in equity, while the rest of the obligation is recorded as a liability.

Income taxThe income tax expense for the reporting period is composed of cur-rent taxes and deferred taxes.

Current taxesCurrent tax liabilities and assets for the current period and prior reporting periods are recognized based on the amount expected to be payable to or refunded by the tax authorities. They are calculated based on the tax regulations and tax rates in effect at the balance sheet date.


Deferred taxesDeferred taxes are accounted for by the liability method. Under this approach, the income tax effects of temporary differences between the tax bases and the values used in the consolidated financial state-ments are recorded as non-current liabilities or non-current assets. Deferred taxes are calculated at actual or expected local tax rates. Changes in deferred taxes are included in income tax expense in the income statement, except for deferred taxes in respect of items that are recognized outside profit or loss. These latter deferred taxes are likewise recognized outside profit or loss; according to the underlying accountable event, they are recognized either in other comprehensive income or directly in equity. Deferred tax liabilities are recognized on all taxable temporary differences except for goodwill. Deferred tax assets are recognized for all deductible temporary differences, the car-ryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differ-ences and the carryforward of unused tax credits and unused tax loss-es can be utilized, except: • When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit for the period nor taxable profit or loss.

• In respect of deductible temporary differences associated with in-vestments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is prob-able that the temporary differences will reverse in the foreseeable future.

Impairment of non-current assets The value of property, plant and equipment and other non-current assets, including intangibles, is reviewed whenever it appears possible, as a result of changed circumstances or events, that the assets’ carry-ing amount represents an overvaluation. Intangible assets that are in the process of being generated are tested for impairment annually. If the carrying amount exceeds the amount recoverable through use or sale of the asset, the carrying amount is reduced to this recoverable amount and the difference is recorded as an impairment charge in the income statement. The recoverable amount is the higher of realizable value or value in use. Value in use is determined on the basis of dis-counted expected future cash flows. Any acquired goodwill and any rights to trademarks or names with an indefinite useful life are not amortized but are reviewed annually at the same date for impairment. This impairment test is based on the results for the fiscal year, the rolling multi-quarter forecast and the rolling multi-year plan.


In the following tables, sales revenue is analyzed by region and by market sector.

In thousands of CHF Plasma Control

Technologies (PCT)

X-Ray Systems

(IXS)

Industrial X-Ray

Modules (IXM)

ebeam Technologies

(EBT)

Consolidated

2019 2018 2019 2018 2019 2018 2019 2018 2019 2018

Geographic regionEurope 9,236 8,947 34,192 35,661 26,689 29,431 12,448 13,979 82,564 88,018

USA

109,230 165,224 18,866 15,167 22,446 23,526 1,218 3,422 151,760

207,338

Asia 33,099 37,925 75,462 70,981 13,814 13,978 1,097 1,866 123,472 124,751

Rest of world 169 101 10,826 13,501 2,096 1,984 718 663 13,810 16,249

Total 151,734 212,197 139,346 135,310 65,045 68,919 15,481 19,930

371,606

436,356

Sales split by market sectorIn thousands of CHF 2019 2018

PCT

Semiconductor 127,716 187,417

Flat panel 8,627 8,741

Others 15,391 16,039

Total PCT 151,734 212,197

IXS

Automotive 52,889 55,955

Electronics 41,692 40,787

Science & new materials 16,377 17,527

Aerospace 20,758 14,395

Others 7,630 6,646

Total IXS 139,346 135,310

IXM

Non-destructive testing 43,320 47,210

Security 11,253 11,372

Others 10,472 10,338

Total IXM 65,045 68,919

Total EBT 15,481 19,930

Total net sales 371,606 436,356

The aggregate amount of the transaction prices allocated to per-formance obligations that were unsatisfied or partly unsatisfied at December 31, 2019 was CHF 138 million (prior year: CHF 114 million). Comet will realize this revenue as soon as the performance obligations have been fulfilled and the customers have acquired control of the products or services. It is expected that this will generally be the case in the next 12 to 24 months.

3 Revenue from contracts with customers


Contract balancesOpening and closing balances of receivables and contract assets are reported in note 13. Contract liabilities from contracts with custom-ers are presented in the balance sheet. The contract assets consisted mainly of the rights to consideration for product deliveries and services of the X-Ray Systems division that were completed but not yet billed at the balance sheet date. The contract liabilities consisted of prepay-ments received from customers. The revenue recognized in 2019 from contract liabilities existing at the beginning of the reporting period amounted to CHF 14.7 million (prior year: CHF 22.6 million).

Material changes in contract balances result from the receipt of customer payments and the invoicing of satisfied performance obligations.

The Group is managed on the basis of the following four operating divisions, which are delineated based on their products and services. For financial reporting purposes the divisions are also referred to here as “operating segments” or “segments”.

• The Plasma Control Technologies (PCT) division develops, manufac-tures and markets vacuum capacitors, radio frequency (RF) gener-ators and RF impedance matching networks for the high-precision control of plasma processes required, for instance, in the production of memory chips and flat panel displays.

• The X-Ray Systems (IXS) division develops, manufactures and mar-kets x-ray systems, and provides related services, for non-destructive examination using x-ray and microfocus technology and computed tomography.

• The Industrial X-Ray Modules (IXM) division develops, manufac-tures and markets highly compact x-ray sources and portable x-ray modules for non-destructive testing, steel metrology, and security inspection.

• The ebeam Technologies (EBT) division develops, manufactures and markets compact ebeam sets for the treatment of surfaces in the food and printing industries.

Segment operating income represents all revenues and expenses attributable to a particular division. The only revenues and expenses not allocated to the segments are those of Comet Holding AG, certain government grants, and net financial items and income taxes. These unallocated expenses and revenues are reported in the “Corporate” column. Transactions between the segments are invoiced at prices also charged to third parties.

The segment assets and liabilities represent all operating items. The following assets and liabilities are not allocated to operating segments: the assets and liabilities of Comet Holding AG, all cash and cash equivalents, all debt and all income tax assets and lia-bilities. These unallocated assets and liabilities are reported in the “ Corporate” column.

4 Segment reporting


Fiscal year 2019In thousands of CHF Plasma

Control Technologies

(PCT)

X-Ray Systems

(IXS)

Industrial X-Ray

Modules (IXM)

ebeam Technologies

(EBT)

Elimination of intersegment

sales

Corporate Consolidated

Net sales

External net sales 151,734 139,346 65,045 15,481 – – 371,606

Intersegment sales – 205 13,095 – (13,301) – –

Total net sales 151,734 139,551 78,141 15,481 (13,301) – 371,606

Earnings

Segment operating income/(loss) 8,206 6,301 16,338 (7,903) (473) – 22,468

Unallocated costs – – – – – (2,530) (2,530)

Operating income 8,206 6,301 16,338 (7,903) (473) (2,530) 19,939

Financing expenses (6,738)

Financing income 2,162

Income before tax 15,363

Income tax (3,336)

Net income 12,027

EBITDA 15,366 12,026 21,742 (6,156) (473) (2,530) 39,974

EBITDA in % of sales 10.1% 8.6% 27.8% – 39.8% 10.8%

Assets and liabilities at Dec. 31, 2019

Segment assets 109,507 112,813 82,941 16,801 – 69,648 391,710

Segment liabilities (31,904) (66,320) (15,610) (6,164) – (75,764) (195,762)

Net assets 77,603 46,493 67,331 10,637 – (6,116) 195,948

Other segment information

Capital expenditure 7,855 8,003 4,474 860 – – 21,194

Depreciation and amortization 7,160 5,725 5,404 1,746 – – 20,035

Change in provisions (2,080) (482) (152) 151 – – (2,563)

Other non-cash expense/(income) 1,104 (58) (623) 420 38 162 1,044

Number of employees at year end 544 439 279 68 – – 1,330

4.1 Operating segments


Fiscal year 2018 1

In thousands of CHF Plasma Control

Technologies (PCT)

X-Ray Systems

(IXS)

Industrial X-Ray

Modules (IXM)

ebeam Technologies

(EBT)

Elimination of intersegment

sales

Corporate Consolidated

Net sales

External net sales 212,197 135,310 68,919 19,930 – – 436,356

Intersegment sales – 359 12,276 63 (12,698) – –

Total net sales 212,197 135,669 81,195 19,993 (12,698) – 436,356

Earnings

Segment operating income/(loss) 38,367 (5,190) 16,126 (28,223) 278 – 21,358

Unallocated costs – – – – – (2,587) (2,587)

Operating income 38,367 (5,190) 16,126 (28,223) 278 (2,587) 18,771

Financing expenses (7,003)

Financing income 3,484

Income before tax 15,251

Income tax (2,905)

Net income 12,347

EBITDA 43,479 969 20,680 (19,853) 278 (2,587) 42,966

EBITDA in % of sales 20.5% 0.7% 25.5% – 99.3% 9.8%

Assets and liabilities at Dec. 31, 2018

Segment assets 109,198 108,349 90,479 18,601 – 53,638 380,266

Segment liabilities (29,669) (56,283) (20,575) (5,047) – (70,400) (181,974)

Net assets 79,529 52,066 69,904 13,554 – (16,762) 198,292

Other segment information

Capital expenditure 13,357 2,468 13,990 3,140 – – 32,956

Depreciation and amortization 5,112 6,159 4,555 8,370 – – 24,195

Change in provisions 906 2,902 (318) (1,228) – – 2,262

Other non-cash expense/(income) 315 (69) 1,150 508 43 1,177 3,125

Number of employees at year end 535 420 314 77 – – 1,346



Reconciliation of aggregate segment assets and liabilities to consolidated results

In thousands of CHF 2019 2018 1

Operating segments’ assets 322,062 326,628

Total cash and cash equivalents 60,255 43,007

Derivatives used for foreign exchange hedging 271 26

Tax receivables 609 2,893

Deferred tax assets 8,397 7,516

Comet Holding AG’s receivables from third parties 115 196

Total assets 391,710 380,266

Operating segments’ liabilities (119,998) (111,574)

Current and non-current debt (71,893) (67,812)

Derivatives used for foreign exchange hedging (41) (379)

Tax payables (2,480) (869)

Comet Holding AG’s payables to third parties (1,350) (1,339)

Total liabilities (195,762) (181,974)


Comet markets its products and services throughout the world and has its own companies in Switzerland, Germany, Denmark, the USA, China, Japan and South Korea. Net sales are allocated to countries on the basis of customer location.

Net sales by regionIn thousands of CHF 2019 2018

Switzerland 11,446 3,208

Germany 32,821 36,726

Rest of Europe 38,297 48,084

Total Europe 82,564 88,018

Total USA 151,760 207,338

China 57,287 57,749

Japan 24,175 22,365

Rest of Asia 42,010 44,637

Total Asia 123,472 124,751

Rest of world 13,810 16,249

Total 371,606 436,356

Property, plant and equipment, right-of-use assets, and intangible assets by regionIn thousands of CHF 2019 2018 1

Switzerland 115,218 115,342

Germany 39,951 35,784

USA 6,958 10,096

Rest of world 3,575 5,251

Total 165,702 166,473


4.2 Geographic information


In the year under review, the Plasma Control Technologies division recorded sales of CHF 84 million with its largest customer, which rep-resented 22.7% of Group sales (prior year: CHF 115 million and 26.4%, respectively).

In thousands of CHF 2019 2018

Customers’ contributions to development projects 1,623 2,136

Government grants 142 109

Income from the development of prototypes 3,166 1,508

Miscellaneous income 120 448

Total other operating income 5,051 4,201


Wages and salaries 117,106 131,542

Employee benefits 20,810 21,588

Total staff costs 137,917 153,130

2019 2018

Number of employees (year-end) 1,330 1,346

Average full-time equivalents during the year 1,261 1,379

Development expenses comprise the costs of new-product develop-ment, improvement of existing products, and process engineering. Comet’s development activities focus on the fields of vacuum technol-ogy, high voltage engineering and material science, and on the further development of the divisions’ core products. In view of the uncertainty of future economic benefits that may flow from development projects, Comet as a rule does not capitalize development costs but charges them directly to the income statement.

4.3 Sales with key accounts

5 Other operating income

6 Staff costs and staff count

6.1 Staff costs

6.2 Staff count

7 Development expenses


No businesses were divested in the year under review.

In the prior year, at November 12, 2018, Comet transferred the ebeam systems business (a part of the EBT division) to a new owner, Tri-City Electric Co. in Davenport, Iowa, USA. The new owner acquired the following assets and assumed the following liabilities of the Davenport facility:

In thousands of CHF Carrying amount Nov. 12, 2018

Trade and other receivables 1,084

Inventories 10,546

Prepaid expenses 87

Total assets 11,717

Trade payables and contract liabilities (5,195)

Provisions (220)

Total liabilities (5,415)

Total net assets 6,302

Cash payment to new owner (293)

Book loss on transfer (6,595)

The loss on the transaction was tax-deductible. The tax effect was a reduction of CHF 1.7 million in tax expense.

8 Loss on disposal of businesses



Amortization of intangible assets 4,602 5,255

Depreciation of right-of-use assets 4,433 4,364

Depreciation of property, plant and equipment 10,537 8,510

Total amortization and depreciation 19,572 18,129

Impairment of intangible assets – 5,400

Impairment of property, plant and equipment 463 666

Total impairment 463 6,066


Further information on the impairment charges related to the divesti-ture of the ebeam systems business in Davenport in 2018 is provided in note 20.


Interest expense 1,999 1,585

Losses on derivatives used for currency hedging 1,104 1,702

Foreign currency translation losses 2 3,635 3,716

Total financing expenses 6,738 7,003

1 Restated for IFRS 16 (see note 2.2).2 Adjusted (see note 2.4).


Interest income 108 30

Gains on derivatives used for currency hedging 636 647

Foreign currency translation gains 1 1,418 2,807

Total financing income 2,162 3,484

1 Adjusted (see note 2.4).


Net interest expense 1,890 1,555

Net foreign currency translation losses/(gains) 2,685 1,964


Foreign currency translation gains and losses resulted largely from items denominated in US dollars and euros.

9 Amortization and depreciation

10 Financing income and expenses

Consolidated Financial Statements 61Comet Holding AG


Current income tax expense in respect of the current year 3,371 3,220

Current income tax expense in respect of prior years 662 194

Deferred income tax (credit) (696) (509)

Total income tax expense 3,336 2,905



Income before tax 15,363 15,251

Expected income tax at base tax rate of 24% (prior year: 24%) 3,687 3,660

Effect of tax rates other than base tax rate 671 52

Effect of tax relief from canton of Fribourg (399) (520)

Effect of non-tax-deductible expenses 202 442

Effect of change in tax rate on deferred income tax (128) (29)

Recognition and offset of tax loss carryforwards not recognized in prior years – (675)

Effect of credits for R&D and domestic manufacturing (382) –

Effect of income tax from other periods (662) (194)

Effect of non-refundable withholding tax 277 193

Other effects 70 (24)

Income tax reported in the income statement 3,336 2,905

Effective income tax rate in % of income before tax 21.7% 19.0%


Comet AG, based in Flamatt, has been granted conditional tax relief by the canton of Fribourg in the form of a reduction in cantonal and municipal taxes for the period to 2022. For 2019 the tax reduction amounted to 50% (prior year: 50%).

11 Income tax

11.1 Current and deferred income tax expense

11.2 Reconciliation of tax expense


Deferred tax assets and liabilities can be analyzed as follows:

2019 2018 1

In thousands of CHF Assets Liabilities Assets Liabilities

Financial instruments 41 (58) 39 (6)

Receivables 2,121 (985) 979 (133)

Inventories 4,312 (1,426) 3,832 (1,064)

Property, plant and equipment 267 (625) 279 (628)

Right-of-use assets 1 (2,376) – (3,583)

Intangible assets 0 (3,184) 1 (3,274)

Trade payables and other liabilities 4,653 (420) 4,454 (184)

Accrued expenses 1,243 (0) 429 (52)

Provisions 894 (1) 1,020 (1)

Employee benefit plan liabilities 1,748 (0) 1,364 –

Tax loss carryforwards, and tax credits for R&D and domestic manufacturing 2,192 – 4,046

Total gross deferred tax of Group companies 17,473 (9,076) 16,442 (8,927)

Netting of deferred tax by Group companies (9,076) 9,076 (8,927) 8,927

Amounts in the consolidated balance sheet 8,397 – 7,516 –


The deferred tax assets and liabilities were measured at local tax rates, ranging from 13% to 35%. No deferred tax liabilities were es-tablished for temporary differences of CHF 68.0 million (prior year: CHF 75.6 million) in respect of the value of the ownership interests in Group companies. Distributions of retained earnings by subsidiaries are not expected to have an effect on income taxes, except for future distributions from China and Korea. There were no tax provisions for non-refundable withholding taxes on future distributions of foreign subsidiaries to Comet Holding AG. Distributions by Comet Holding AG to its shareholders have no effect on the reported or future income taxes.

11.3 Deferred tax assets and liabilities



Net asset at January 1 7,516 6,916

Origination and reversal of temporary differences recognized in the income statement 2,549 (2,853)

Recognition of deferred tax assets on loss carryforwards and R&D credits 451 3,772

Use of tax loss carryforwards (2,304) (408)

Deferred tax credit in the income statement 696 510

Origination and reversal of temporary differences recognized in other comprehensive income 361 132

Foreign currency translation differences (177) (42)

Net asset at December 31 8,397 7,516


Deferred tax assets, including tax loss carryforwards and expected tax credits, are recognized only if it is likely that future taxable profits will be available to which these deferred tax assets can be applied. Tempo-rary differences for which no tax assets were recognized were nil (prior year: nil).

At the balance sheet date of December 31, 2019, tax loss carryfor-wards stood at CHF 5.0 million (prior year: CHF 13.0 million). Includ-ing tax credits for R&D and domestic manufacturing, the resulting deferred tax assets were CHF 2.2 million (prior year: CHF 4.0 million). The existing loss carryforwards can be carried forward indefinitely.

In the fiscal year, there were no unrecognized deferred tax assets from tax loss carryforwards (prior year: nil).

Basic earnings per share represents the reporting period’s consolidat-ed net income divided by the average number of shares outstanding.

2019 2018 1

Weighted average number of shares outstanding 7,762,845 7,757,904

Net income in thousands of CHF 12,027 12,347

Net income per share in CHF, diluted and basic 1.55 1.59


There are no outstanding stock options or stock subscription rights that could lead to a dilution of earnings per share.

11.4 Movement in deferred tax assets and liabilities

11.5 Tax loss carryforwards

12 Earnings per share



Trade receivables, gross 54,818 53,996

Impairment of trade receivables (495) (614)

Trade receivables, net 54,323 53,382

Refundable sales taxes and value-added taxes 4,392 2,648

Prepayments to suppliers 2,097 5,552

Contract assets – 887

Sundry receivables 1,815 1,474

Total other receivables 8,304 10,561

Total trade and other receivables 62,627 63,943

The allowance account for impairment of trade receivables showed the following movement:


January 1 614 1,104

Added 128 95

Released (230) (562)


December 31 495 614

At the balance sheet date, complete impairment was recognized on CHF 0.4 million (prior year: CHF 0.5 million) of trade receivables. Within the item “total other receivables” and within contract assets, there were no amounts past due or written down. The Group does not hold security against trade and other receivables.

The aging schedule for past-due trade receivables on which impairment has been recognized is summarized in the table below

Fiscal year 2019In thousands of CHF Expected loss rate Gross carrying amount

Dec. 31, 2019Expected credit loss

Dec. 31, 2019Net carrying amount

Dec. 31, 2019

Trade receivables 54,818 495 54,323

Not past due 0.1% 49,078 48 49,030

Over 30 days past due, impairment recognized 0.2% 3,827 8 3,819

Over 60 days past due, impairment recognized 0.5% 698 4 694



Over 150 days past due, impairment recognized 36.3% 1 1,199 435 764

1 Individual impairment allowances included.

13 Trade and other receivables


Fiscal year 2018In thousands of CHF Expected loss rate Gross carrying amount

Dec. 31, 2018Expected credit loss

Dec. 31, 2018Net carrying amount

Dec. 31, 2018

Trade receivables 53,996 614 53,382

Not past due 0.1% 46,892 68 46,824

Over 30 days past due, impairment recognized 0.3% 5,004 16 4,988




Over 150 days past due, impairment recognized 57.4% 1 905 519 386

1 Individual impairment allowances included.


Other financial assets at fair value through profit or loss


Total other financial assets at fair value through profit or loss 271 26

Other financial assets at amortized cost

Other non-current financial assets 367 209

Total other financial assets at amortized cost 367 209

Total other financial assets 638 235

Total current 271 26

Total non-current 367 209


Other financial liabilities at fair value through profit or loss


Total other financial liabilities at fair value through profit or loss 41 379

14 Other financial assets and liabilities

14.1 Other financial assets

14.2 Other financial liabilities


At the balance sheet date, open positions in forward exchange contracts were as follows:


USD forward exchange contracts

Contract amounts 14,741 21,763

Positive fair values 176 26

Negative fair values 12 284

JPY forward exchange contracts

Contract amounts 5,248 2,197

Positive fair values 93 –


CNY forward exchange contracts

Contract amounts 902 858

Positive fair values 2 –


The gains and losses from foreign exchange contracts are recognized as financing income or expense (see note 28). The contract amounts shown represent the notional principal amounts of the forward contracts. Consistent with the nature of the Group’s activities, the forward exchange contracts have maturities of less than one year; most are due within six months.


Raw materials and semi-finished products 41,639 45,495

Work in process 17,128 14,470

Finished goods 26,417 31,125

Total inventories 85,184 91,090

The inventory amounts reflect any necessary individual write-downs for items with a market value below manufacturing cost. The expense recognized for inventory write-downs was CHF 4.6 million (prior year: CHF 5.5 million).

14.3 Derivative financial instruments

15 Inventories



Contract costs 1,164 1,629

Other prepaid expenses 7,132 3,480

Total prepaid expenses 8,296 5,109

The contract costs represent capitalized sales commissions for agent activities (incremental costs directly attributable to obtaining a con-tract). In the fiscal year, sales commissions of CHF 3.4 million were recognized in the income statement (prior year: CHF 3.6 million).

The other prepaid expenses consisted largely of prepayments made for the subsequent fiscal year.

Fiscal year 2019In thousands of CHF Real estate Plant and

equipmentOther tangible

assetsAssets under construction

Total property, plant and

equipment

Cost

January 1, 2019 96,919 85,491 19,275 8,637 210,322

Additions 951 5,761 453 6,540 13,705

Commissioning of assets under construction 225 4,417 612 (5,254) –

Reclassifications (1,706) 1,646 60 – –

Disposals (132) (1,960) (1,735) – (3,827)

Foreign currency translation differences (21) (523) (403) 17 (930)

December 31, 2019 96,236 94,832 18,262 9,940 219,269

Accumulated depreciation

January 1, 2019 26,230 57,672 12,829 – 96,731

Additions 2,512 5,467 2,558 – 10,537

Impairment – 463 – – 463

Reclassifications (75) 69 6 – –

Disposals (132) (1,805) (1,599) – (3,536)

Foreign currency translation differences (11) (347) (270) – (629)

December 31, 2019 28,524 61,519 13,524 – 103,568

Carrying amount

January 1, 2019 70,689 27,819 6,446 8,637 113,591

December 31, 2019 67,712 33,312 4,738 9,940 115,702

16 Prepaid expenses

17 Property, plant and equipment


The disposals of other tangible assets in the fiscal year included the reclassification of CHF 0.1 million (prior year: CHF 0.5 million) of inter-nally produced demonstration equipment to inventories, which did not result in an outflow of funds.

Assets pledged or assigned as collateral for Group obligationsAt December 31, 2019 and December 31, 2018, all real estate liens (mortgage notes in the amount of CHF 30.0 million) were held within the Group.

Fiscal year 2018In thousands of CHF Real estate Plant and


assetsAssets under construction

Total property, plant and

equipment

Cost

January 1, 2018 51,637 76,928 18,909 41,200 188,674

Additions 8,431 11,368 1,084 7,837 28,720

Commissioning of assets under construction 36,872 2,527 1,004 (40,403) –

Disposals – (5,076) (1,495) – (6,571)

Foreign currency translation differences (21) (256) (227) 3 (501)

December 31, 2018 96,919 85,491 19,275 8,637 210,322

Accumulated depreciation

January 1, 2018 24,998 57,020 11,601 – 93,618

Additions 1,243 4,856 2,411 – 8,510

Impairment – 535 131 – 666

Disposals – (4,567) (1,140) – (5,707)

Foreign currency translation differences (11) (172) (174) – (357)

December 31, 2018 26,230 57,672 12,829 – 96,731

Carrying amount

January 1, 2018 26,639 19,908 7,309 41,200 95,056

December 31, 2018 70,689 27,819 6,446 8,637 113,591

For the building expansion completed at the end of 2018 and for the improvements to it, interest of CHF 0.6 million was capitalized (year under review: nil). The interest rate used was the effective interest rate of the bond (see note 21).

In the prior year, the divestiture of the ebeam systems business in Davenport resulted in an impairment charge of CHF 0.7 million and reductions in cost and accumulated depreciation of CHF 1.4 million for plant and equipment and of CHF 0.4 million for other tangible assets. At the time of the disposal, all items of property, plant and equipment had already been fully written off. Further information on the disposal is provided in note 8.


The rights of use and liabilities arising from leases showed the following movement:

Fiscal year 2019Right-of-use assets Lease

liabilitiesIn thousands of CHF Real estate Plant and


assetsTotal

January 1, 2019 11,428 610 17 12,055 14,163

Additions 3,858 504 1 4,363 4,363

Disposals – – – – (62)

Depreciation, amortization and impairment (3,973) (451) (9) (4,433) –

Accretion of interest – – – – 573

Repayment of lease liabilities – – – – (5,440)

Foreign currency translation differences (279) (23) – (302) (207)

December 31, 2019 11,033 640 9 11,682 13,389

The non-current lease liabilities largely have remaining maturities of two to five years. The expected future lease payments are presented in note 29.

The additions to right-of-use assets and lease liabilities were non-cash items and are thus not included in cash flow from investing activities.

Fiscal year 2018Right-of-use assets Lease

liabilitiesIn thousands of CHF Real estate Plant and


assetsTotal

January 1, 2018 13,564 685 25 14,274 16,771

Additions 1,916 386 – 2,303 2,303

Depreciation, amortization and impairment (3,916) (439) (8) (4,364) –

Accretion of interest – – – – 698

Repayment of lease liabilities – – – – (5,394)

Foreign currency translation differences (137) (22) – (159) (216)

December 31, 2018 11,428 610 17 12,055 14,163

18 Right-of-use assets and lease liabilities


The composition of the lease expenses in fiscal 2019 and 2018 is shown below:


Depreciation, amortization and impairment 4,433 4,364

Interest expenses 573 698

Expenses for short-term leases 103 122

Expense for low-value leases 7 62

Expense for variable lease payments not included in the measurement of lease liabilities 40 –

Total lease expenses 5,155 5,246

Comet has lease agreements containing extension and termination options (see note 2.2). At December 31, 2019, all options either deemed highly likely to be exercised or not to be exercised were taken into ac-count in the valuation of the lease liabilities.

The undiscounted payments of options that were not exercised as at December 31, 2019 amounted to CHF 6.4 million due within the subse-quent five years (prior year: CHF 5.9 million) and to CHF 11.8 million for option periods of more than five years (prior year: CHF 8.9 million).

Fiscal year 2019In thousands of CHF Goodwill and

trademarksCustomer

listsTechnology Software Other

intangible assets

Total intangible

assets

Cost

January 1, 2019 28,412 20,916 2,432 21,614 276 73,650

Additions – – – 3,126 – 3,126

Reclassifications – – – 241 (241) –

Disposals – – – (67) – (67)

Foreign currency translation differences (797) (534) (75) (301) (1) (1,709)

December 31, 2019 27,615 20,382 2,357 24,613 34 75,000

Accumulated amortization

January 1, 2019 0 16,278 1,516 14,994 35 32,823

Additions – 1,301 281 3,020 – 4,602

Disposals – – – (67) – (67)

Foreign currency translation differences – (441) (60) (173) (1) (676)

December 31, 2019 0 17,138 1,737 17,774 34 36,683

Carrying amount

January 1, 2019 28,412 4,638 916 6,620 241 40,827

December 31, 2019 27,615 3,244 620 6,839 0 38,318

19 Intangible assets


Fiscal year 2018In thousands of CHF Goodwill and

trademarksCustomer

listsTechnology Software Other

intangible assets

Total intangible

assets

Cost

January 1, 2018 29,229 28,825 4,753 22,174 224 85,205

Additions – – 401 1,291 241 1,933

Disposals – (7,529) (2,654) (1,612) (188) (11,983)

Foreign currency translation differences (817) (380) (68) (239) (1) (1,505)

December 31, 2018 28,412 20,916 2,432 21,614 276 73,650

Accumulated amortization

January 1, 2018 0 19,199 2,041 12,253 65 33,558

Additions – 1,470 367 3,413 5 5,255

Impairment – 3,433 1,814 – 153 5,400

Disposals – (7,529) (2,654) (562) (188) (10,933)

Foreign currency translation differences – (295) (52) (110) (0) (457)

December 31, 2018 0 16,278 1,516 14,994 35 32,823

Carrying amount

January 1, 2018 29,229 9,626 2,712 9,921 159 51,647

December 31, 2018 28,412 4,638 916 6,620 241 40,827

The categories “goodwill and trademarks”, “customer lists” and “tech-nology” were capitalized in connection with business combinations. The residual useful lives of the customer lists ranged up to five years.

Under a long-term brand strategy, the established Yxlon name is used alongside the Comet brand. The Group therefore deems the capital-ized Yxlon brand to have an indefinite useful life.

The divestiture of the ebeam systems business in Davenport in the prior year resulted in an impairment charge of CHF 5.4 million and re-ductions in cost and accumulated amortization of CHF 4.4 million for customer lists and of CHF 2.7 million for technology. Further informa-tion on the disposal is provided in note 8.

The impairment test for goodwill and other intangible assets with in-definite useful lives was performed as at September 30, 2019. For the purpose of the impairment test, the assets to be tested were allocat-ed to and measured as the following two cash generating units, at the level of the IXS division and (within the IXM division) at the level of the IXT business unit: • X-Ray Systems (IXS), as the relevant cash generating unit for all ac-tivities of the historically acquired Yxlon group and for the FeinFocus product group, with the exception of the generator business;

• Industrial X-Ray Technology (IXT), for the generator business acquired as part of the acquisition of Yxlon.

20 Impairment test of goodwill and intangible assets with indefinite useful lives


The impairment test is based on the value in use method. The recov-erable amount is determined from the present value of the future cash flows (DCF valuation). The calculations are based on the Board- approved rolling forecast current at the time of the impairment test, and on the Board-approved rolling medium-term plan for 2020 to 2022. Using experience-based estimates, the amounts in the forecast and in the medium-term plan are based on growth projections for net sales, operating income and other parameters, taking into consider-ation the estimated market trends in the various regions. Cash flows beyond the forecast period are extrapolated using an assumed growth rate of 1.5%, which is within the expected rate of market growth. The assumptions applied in determining value in use correspond to the ex-pected long-term average growth rate of the X-Ray Systems division’s operating business and of the generator business of Industrial X-Ray Modules. Input variables with a critical impact on the outcome of the impairment test are the assumed rates of sales growth and the pro-jected trend in operating income.

Carrying amount of the assets testedX-Ray Systems (IXS) CGU Industrial X-Ray Technology

(IXT) CGUTotal

In thousands of CHF 2019 2018 2019 2018 2019 2018

Goodwill 18,573 19,287 6,873 6,873 25,446 26,160

Trademarks (Yxlon) 2,169 2,253 0 0 2,169 2,253

Total carrying amount 20,742 21,540 6,873 6,873 27,615 28,412

Assumptions applied in the valuation modelX-Ray Systems (IXS) CGU Industrial X-Ray Technology

(IXT) CGU

2019 2018 2019 2018

Discount rate (WACC) before tax 12.5% 12.2% 11.4% 12.8%

Growth rate of terminal value 1.5% 1.8% 1.5% 1.5%

Sensitivities to the assumptions applied in the valuation modelThe measurement of the values in use of the X-Ray Systems CGU (IXS) and the Industrial X-Ray Technology CGU (IXT) is sensitive to the fol-lowing assumptions in the planning period (2020 to 2022): • Growth assumptions: Sales revenue is projected by product group and region. Based on the recovering situation of 2019 as the starting point, the average annual rate of sales growth is assumed to be 7% for IXS (prior year: 6%) and 11% for IXT (prior year: 9%).

• Gross margins: It is expected that with rising sales, gross margins in the medium term will average approximately 38% for IXS (prior year: 38%) and 46% for IXT (prior year: 50%). Target achievement also depends in part on the trend in the purchasing prices of materials.

• Foreign exchange rates: The movement in exchange rates between the Swiss franc and the euro and US dollar has an effect on company value. The forecasts are based on September 2019 exchange rates.


• Discount rate (WACC): The capital costs were determined based on borrowing costs (before tax) and on the long-term risk-free rate, a small-cap premium, and a market risk premium weighted by a Comet-specific beta factor.

No impairment was recognized in the year under review and Comet believes that, with a realistic change in the material assumptions, the recoverable amount would not fall below the carrying amount.

In the prior year, at the end of the first half of 2018, there were indi-cations of asset impairment for the ebeam systems business (EBS, part of the EBT division) due to lower profitability projections, and an impairment test was therefore performed for it at June 30, 2018. The calculations were based on the Board-approved rolling forecast cur-rent at the time of the impairment test, and on the Board- approved rolling medium-term plan for 2019 to 2021. The impairment test determined that an expense of CHF 6.1 million needed to be recog-nized for the impairment of certain property, plant and equipment and intangible assets in the EBS business. The expense was disclosed in the income statement under cost of sales (CHF 2.2 million), develop-ment expenses (CHF 0.2 million) and marketing and selling expenses (CHF 3.7 million).

Comet divested the ebeam systems business effective November 12, 2018, which gave rise to additional losses. Details are provided in note 8.

On April 20, 2016 a five-year, CHF 60 million bond was issued. The bond has a coupon rate of 1.875% and is listed on the SIX Swiss Ex-change (ticker symbol COT16; security number 32061943). Its effective interest rate is 2%.

At the end of the fiscal year under review the Comet Group had un-drawn credit facilities of CHF 46.6 million (prior year: CHF 51.4 million). Of this total, CHF 4.3 million (prior year: CHF 5.8 million) was reserved for hedging transactions.

The non-current debt in the fiscal year consisted only of the five-year bond maturing in 2021 (in the prior year, it also included fixed-rate, fixed-maturity bank loans denominated in CHF). In the year under review, all interest and principal payments were made as contractually agreed.


Repayment due within five years 60,000 63,000

Repayment due in more than five years – –

Subtotal 60,000 63,000

Future amortization of costs (107) (188)

Total non-current debt 59,893 62,812

21 Debt

21.1 Non-current debt


Loans with original maturities of more than twelve months coming due in the subsequent year were reclassified to current debt.

Fiscal year 2019In thousands of CHF Jan. 1, 2019 Cash flows Reclassif from

non-current to current

Unwinding of discount, and

remeasurement


Dec. 31, 2019

Current debt 5,000 4,000 3,000 – – 12,000

Non-current debt 62,812 – (3,000) 81 0 59,893

Total debt 67,812 4,000 – 81 0 71,893

Fiscal year 2018 1

In thousands of CHF Jan. 1, 2018 Cash flows Reclassif from non- current to

current

Unwinding of discount, and

remeasurement


Dec. 31, 2018

Current debt 2,000 – 3,000 – – 5,000

Non-current debt 65,733 – (3,000) 79 0 62,812

Total debt 67,733 – – 79 0 67,812



Trade payables 26,306 23,971

Sundry payables 3,889 4,406

Sales commissions 4,204 4,614

Total financial liabilities 34,398 32,991

Sales tax and value-added tax 2,211 1,928

Total other payables 2,211 1,928

Total trade and other payables 36,609 34,919


Accrued staff costs 5,733 6,602

Other accrued expenses 12,737 13,805

Total accrued expenses 18,470 20,407


21.2 Movement in debt

22 Trade and other payables

23 Accrued expenses


Accrued staff costs consist mainly of the amount accrued for perfor-mance-based compensation, and employees’ vacation and overtime credits. The item “other accrued expenses” relates to outstanding invoices and payables of the fiscal year, such as for rent, energy and consulting.

Fiscal year 2019In thousands of CHF Warranties Other provisions Total provisions

January 1, 2019 7,646 4,481 12,127

Added 6,752 790 7,542

Used (5,207) (591) (5,798)

Released (1,952) (2,356) (4,308)

Foreign currency translation differences (126) (80) (206)

December 31, 2019 7,113 2,244 9,357

Of which:

January 1, 2019

Current provisions 7,646 4,434 12,080

Non-current provisions – 47 47

December 31, 2019

Current provisions 7,113 2,233 9,346

Non-current provisions – 11 11

The provision for warranties covers the risk of expenses for defects that have not occurred to date, but could potentially occur until the end of the warranty periods. Warranty provisions are measured based on historical experience.

In 2017, in an internal review of compliance with export regulations, a procedural error was found in the USA in connection with a transfer license. Comet informed the appropriate authorities of the error and initiated the necessary corrective measures. In the year under review, Comet was issued a warning by the authorities in this matter and this allowed the case to be closed. The unneeded provision of CHF 1.1 mil-lion was reversed through the income statement in the fiscal year.

As well, in the fiscal year, unneeded provisions of CHF 1.0 million related to the reorganization of the IXS division were reversed.

24 Provisions


The Comet Group maintains defined benefit pension plans in Switzerland and Germany. These plans differ according to their partic-ular purpose (retirement, disability, and/or survivor benefits) and are based on the legal requirements in the respective countries.

SwitzerlandThe defined benefit plans are managed within a multi-employer pen-sion fund. This is a separate legal entity falling under the Swiss Federal Act on Occupational Retirement, Survivors’ and Disability Pensions (the BVG). The pension fund maintains a main (“base”) plan for em-ployees that provides the legally required benefits, and a supplemental plan that provides benefits in respect of pay components above the statutory range. The base plan was switched to a fully insured pen-sion model effective January 1, 2018, as was the supplemental plan with effect from January 1, 2019. From 2019, all investment risk is thus carried by the pension fund, or ultimately by the insurer. Both plans are administered by the multi-employer pension fund, which is in the form of a foundation organized by an insurance company. The pension fund is managed by the foundation’s board of directors, which is composed of equal numbers of employee and employer representatives and is required to act in the interests of the plan participants.

Plan participants are insured against the financial consequences of old age, disability and death. The benefits are specified in a set of regula-tions. Minimum levels of benefits are prescribed by law. Contribution levels are set as a percentage of the insured portion of employees’ pay. The retirement benefit is calculated as the retirement pension asset existing at the time of retirement, multiplied by the conversion rate specified in the regulations. Plan participants can opt to receive their principal as a lump sum instead of drawing a pension. The supplemen-tal plan as a rule pays out a lump sum, but a pension can be drawn on request. The amounts of the disability and survivor pensions are defined as a percentage of insured pay.

GermanyIn Germany there is a closed plan with pension commitments which no longer has active participants. The obligations in respect of current pension payments and deferred pensions are recognized in the balance sheet.

Principal actuarial assumptionsSwitzerland Germany

2019 2018 2019 2018

Discount rate at January 1 0.7% 0.6% 1.6% 1.5%

Discount rate at December 31 0.2% 0.7% 0.6% 1.6%

Expected rate of salary increases 1.0% 1.0% – –

Life tables used as basis for life expectanciesBVG 2015

GTBVG 2015

GTHeubeck 2018 GT

Heubeck 2018 GT

25 Employee benefits

25.1 Defined benefit plans


Movement in present value of defined benefit obligation, in plan assets and in net carrying amount for defined benefit plans

Fiscal year 2019In thousands of CHF Present value of

defined benefit obligation

Fair value of plan assets

Net carrying amount

recognized in balance sheet

January 1 (84,452) 74,513 (9,939)

Current service cost (3,703) – (3,703)

Past service cost 648 – 648

Administration cost, excl. cost of managing plan assets (41) – (41)


Interest (expense)/income (609) 530 (79)

Defined benefit cost recognized in the income statement (3,705) 530 (3,175)

Return on plan assets, excluding interest income – (39) (39)

Actuarial loss arising from changes in financial assumptions (3,668) – (3,668)

Actuarial gain arising from experience adjustments 283 – 283

Defined benefit cost recognized in other comprehensive income (3,385) (39) (3,425)

Benefits paid-in/deposited 5,474 (5,454) 20

Employee contributions (2,051) 2,051 –

Employer contributions – 2,712 2,712

Foreign currency translation differences 77 (45) 33

December 31 (88,042) 74,268 (13,774)

Reported as an asset –

Reported as a liability (13,774)

For the defined benefit plans in Switzerland, the board of directors of the pension fund decided in 2019 and in 2018 to reduce the pension conversion rates with effect from the year 2022 and 2021, respectively. These plan amendments led to a negative past service cost (i.e., they resulted in income) and a corresponding reduction in the defined ben-efit obligation. The positive pre-tax effect of CHF 0.6 million was dis-tributed across the 2019 operating income of the divisions as follows: PCT: CHF 0.2 million; IXM: CHF 0.3 million; EBT: CHF 0.1 million (2018: PCT: CHF 0.2 million; IXM: CHF 0.3 million; EBT: CHF 0.1 million.)

The average duration of the defined benefit obligation was 12.4 years.


Fiscal year 2018In thousands of CHF Present value of

defined benefit obligation

Fair value of plan assets

Net carrying amount

recognized in balance sheet

January 1 (82,536) 75,428 (7,108)


Past service cost 613 – 613

Administration cost, excl. cost of managing plan assets (41) – (41)


Interest (expense)/income (517) 461 (57)

Defined benefit cost recognized in the income statement (3,581) 461 (3,120)

Return on plan assets, excluding interest income – (290) (290)

Actuarial gain arising from changes in financial assumptions 731 – 731

Actuarial gain arising from changes in demographic assumptions 1,053 – 1,053

Actuarial loss arising from experience adjustments (2,407) – (2,407)

Defined benefit cost recognized in other comprehensive income (623) (290) (913)

Benefits paid-in/deposited 4,387 (4,364) 23

Employee contributions (2,173) 2,173 –

Employer contributions – 1,152 1,152

Foreign currency translation differences 74 (47) 28

December 31 (84,452) 74,513 (9,939)

Reported as an asset –

Reported as a liability (9,939)

Key figures by countrySwitzerland Germany

In thousands of CHF 2019 2018 2019 2018

Present value of defined benefit obligation (85,969) (82,505) (2,072) (1,947)

Fair value of plan assets 73,116 73,297 1,152 1,216

Net carrying amount recognized in the balance sheet (12,854) (9,207) (920) (732)

Defined benefit cost recognized in the income statement (3,164) (3,109) (11) (11)

Defined benefit cost recognized in other comprehensive income (3,195) (913) (230) –

The employer contributions to the plans in Switzerland for fiscal year 2020 are expected to amount to CHF 2.8 million.


Major categories of plan assetsIn thousands of CHF 2019 2018

Cash and cash equivalents – 13,629

Total plan assets at fair value (quoted market price) – 13,629

Assets from insurance contract 74,268 60,884

Total assets without a quoted market price 74,268 60,884

Total plan assets 74,268 74,513

As the base plan and (since January 1, 2019) the supplemental plan are managed under a fully insured model, all investment risk is carried by the pension fund, or ultimately by the insurer. The plan assets are therefore reported as the item “assets from insurance contract”. At December 31, 2018, the plan assets were held in cash and cash equiv-alents, in preparation for the change-over of the supplemental plan to the fully insured model.

Companies of the Comet Group do not make loans to the pension plans and do not utilize any real estate held by the plans.

SensitivitiesThe following table presents an analysis of how the reported present value of the defined benefit obligation would change in response to hypothetical changes in the actuarial assumptions.

Sensitivity of present value of defined benefit obligation to different scenarios

Switzerland Germany

In thousands of CHF 2019 2018 2019 2018

Discount rate: 0.25% decrease 88,712 84,964 2,143 2,011

Discount rate: 0.25% increase 83,412 80,206 2,006 1,887

Expected rate of salary growth: 0.25% decrease 85,839 82,374 2,072 1,947

Expected rate of salary growth: 0.25% increase 86,086 82,637 2,072 1,947

Life expectancy: 1-year increase 86,803 83,177 2,171 2,040

Life expectancy: 1-year decrease 85,138 81,832 1,974 1,855

The contributions paid to defined contribution plans in the fiscal year amounted to CHF 6.1 million (prior year: CHF 6.3 million).

25.2 Defined contribution plans


Comet grants length-of-service awards to its employees after a cer-tain number of years of service, in the form of lump-sum payments that increase in amount with the number of years of employment. The provision for this item changed as follows in the year under review:


Provision at January 1 1,368 1,330

Current service cost 192 202

Interest cost 16 12

Benefits paid (135) (137)

Actuarial losses/(gains) 64 (13)


Provision at December 31 1,476 1,368

The capital stock at January 1, 2019 was CHF 7,759,882, divided into 7,759,882 registered shares with a par value of CHF 1.00 per share.

In fiscal year 2019 the capital stock was increased by 4,326 shares from the portion of authorized capital designated for equity-based com-pensation. Including the increase of 4,326 shares from this portion of authorized capital, Comet Holding AG at December 31, 2019 thus had a new total of CHF 7,764,208 of capital stock, divided into 7,764,208 registered shares with a par value of CHF 1.00 per share. The capital stock is fully paid in.

At its meeting on August 9, 2019 the Board of Directors established that the capital increase from authorized capital for equity-based compensation was properly performed. The information in the com-mercial register, and the Bylaws of Comet Holding AG, were updated to reflect the change in capital stock.

2019 2018

Number of shares

Par value in CHF

Number of shares

Par value in CHF

January 1 7,759,882 7,759,882 7,753,658 7,753,658

Increase in capital from the portion of authorized capital designated for equity compensation 4,326 4,326 6,224 6,224

December 31 7,764,208 7,764,208 7,759,882 7,759,882

At the balance sheet date, Comet Holding AG held no treasury stock (prior year: nil).

25.3 Length-of-service awards

26 Equity capital structure and shareholders

26.1 Capital stock


Under section 3b of its Bylaws, a portion of the Company’s unissued authorized capital is designated for use only as equity-based compen-sation (in German this portion is known as “bedingtes Aktienkapital”). In such a capital increase, stock is issued to Executive Committee members and / or Board members of Comet Holding AG. With respect to this portion of authorized capital, the other shareholders’ pre-emp-tive rights are excluded. The issuance of stock or stock subscription rights is based on a compensation plan (in the form of a written regu-lation) adopted by the Board of Directors.

In May 2019, in accordance with the compensation plan, the members of the Board of Directors were granted a total of 1,679 shares of stock in payment of CHF 153,948 of fixed retainers due for fiscal year 2018. In addition, as part of their compensation for 2019, the members of the Board of Directors were granted a total of 835 shares in payment of CHF 76,561 of fixed retainers due for the period from January 1, 2019 to the 2019 Annual Shareholder Meeting. The fully paid shares were applied to the retainers due at a price of CHF 91.69 per share.

Members of the Executive Committee were granted a total of 1,812 shares in payment of CHF 166,142 of profit-sharing compensa-tion due for fiscal year 2019. The fully paid shares were applied to the compensation due at a price of CHF 91.69 per share.

As a result of these grants of a total of 4,326 shares made in 2019, the Company’s unissued authorized capital for equity-based compensa-tion showed the following movement:

2019 2018

Number of shares

Par value in CHF

Number of shares

Par value in CHF

January 1 203,238 203,238 209,462 209,462

Increase in capital (awards to Board of Directors for prior term’s retainer and to Execu-tive Committee for prior year’s profit-sharing compensation) (4,326) (4,326) (6,224) (6,224)

December 31 198,912 198,912 203,238 203,238

At the end of the year, the remaining unissued authorized capital for equity-based compensation was CHF 198,912, or 2.6% of the existing capital stock.

At December 31, 2019, in addition to shares outstanding and to unissued authorized capital for equity compensation, the Company had unissued authorized capital for purposes set out in section 3a of the Bylaws (in German: “genehmigtes Aktienkapital”). The Board of Directors is authorized, at any time until April 26, 2020, to increase the capital stock by a maximum of CHF 1.4 million by issuing up to 1,400,000 fully payable registered shares with a par value of CHF 1.00 per share, which represents 18% of the existing capital stock. Increases

26.2 Authorized capital for equity compensation

26.3 Authorized capital for other capital increases


by way of firm commitment underwriting and increases by part of the total authorized amount are permitted. The amount of the respective issue, the date when entitlement to dividend commences, the terms of any exercise of pre-emptive rights and the nature of the contributions are determined by the Board of Directors.

The Board of Directors is authorized to exclude shareholders’ sub-scription rights and assign these rights to third parties if the shares in question are to be used for the acquisition of companies via equity swaps or to finance the cash purchase of companies or parts of com-panies, or to finance new investment projects of Comet Holding AG, or for providing an ownership interest to an industrial partner (either in order to cement a strategic alliance or in the event of a takeover offer for the Company). Stock for which pre-emptive rights are granted but not exercised must be sold by the Company at market prices.

At December 31, 2019 the Company, according to disclosure notifica-tions, had the following significant shareholders (defined for this pur-pose as shareholders with voting rights in excess of 3% of the Comet capital stock recorded in the Swiss commercial register of companies):

Beneficial owner Direct shareholder Share of vot-ing rights as disclosed by

shareholdersHaldor Foundation Tringle Investment Pte Ltd 10.13%

N/AVERAISON SICAV – Engagement Fund 9.99%

Pictet Asset Management SA (Direction de Fonds) 5.07%

UBS Fund Management (Switzerland AG) 3.63%

The Company has not been notified of nor is aware of any other shareholders that held more than 3% of its shares. To the best of the Company’s knowledge there were no voting pool agreements.

As a global company, Comet is exposed to numerous legal risks. These can include, especially, risks relating to product liability, patent law, export regulations, tax law and competition law. The outcomes of cur-rently pending and future legal proceedings cannot be predicted with certainty. Expenses may therefore be incurred that are not, or not fully, covered by insurance benefits and which may thus have effects on the business trajectory and on future financial results.

26.4 Significant shareholders

27 Off-balance sheet transactions

27.1 Contingent liabilities


Provisions are established inasmuch as the financial consequences of a past event can be estimated reliably and the estimate can be con-firmed by independent expert opinion. Contingent liabilities that are likely to result in an obligation are included under provisions.

In 2006 Comet sold a property in Switzerland that is listed in the reg-ister of contaminated sites. Until September 2019 the site was moni-tored and inspected using test drilling. The monitoring activities were concluded with the final report of November 2019. No exceedance of concentrations and no deterioration of groundwater quality were de-tected and the site is thus no longer classified as requiring monitoring. No site reclamation is therefore necessary. Comet would be liable only if, in the event of new construction, contaminated excavated materi-al were to require disposal. In Comet’s estimation, based on current knowledge, no significant costs are likely to result.

As part of its operating activities, Comet had purchase obliga-tions at the balance sheet date totaling CHF 16.6 million, of which CHF 10.7 million were current in nature and CHF 5.9 million mature in the five-year period that begins in 2021. The payment obligations arise from off-balance sheet offtake agreements with suppliers, most of which are set out in master agreements.

There were no investment or capital commitments at December 31, 2019.

27.2 Other off-balance sheet obligations


Fiscal year 2019In thousands of CHF Financial assets Financial liabilities

FVTPL 1 At amortized cost


Fair value

Cash and cash equivalents 60,255 *

Trade receivables, net 54,323 *

Derivatives 271 41 230

Financial assets 367 *

Current debt 12,000 12,042

Trade and other payables 34,398 *

Non-current debt (fixed rate) 59,893 60,870

Total 271 114,945 41 106,291

Interest income/(expense) – 108 – (1,999)

Gain/(loss) on derivatives 636 – (1,104) –

Change in impairment and losses on trade receivables 102

Total net gain/(loss) recognized in the income statement 636 211 (1,104) (1,999)

1 At fair value through profit or loss.* The carrying amount approximates fair value.

28 Financial instruments

28.1 Classes of financial instruments


IFRS require all financial instruments which are held at fair value, and all reported fair values, to be categorized into three classes (or “levels”) according to whether the fair values are based on quoted prices in ac-tive markets (Level 1), on models using other observable market data (Level 2), or on models using unobservable inputs (Level 3).

The only financial instruments that the Comet Group recognized at fair value are derivatives held for currency hedging. The measurement of the derivatives falls into Level 2 of the fair value measurement hier-archy under IFRS 13.

Fiscal year 2018 1

In thousands of CHF Financial assets Financial liabilities



Fair value

Cash and cash equivalents 43,007 *

Trade receivables, net 53,382 *

Derivatives 26 379 (353)

Financial assets 209 *


Trade and other payables 32,991 *

Non-current debt (fixed rate) 62,812 63,133

Total 26 96,599 379 100,803

Interest income/(expense) – 30 – (1,585)

Gain/(loss) on derivatives 647 – (1,702) –

Change in impairment and losses on trade receivables 467

Total net gain/(loss) recognized in the income statement 647 497 (1,702) (1,585)

1 Restated for IFRS 16 (see note 2.2).2 At fair value through profit or loss.* The carrying amount approximates fair value..

The only differences between fair values and carrying amounts oc-curred in fixed-rate debt. For the CHF 60 million bond, the quoted market price is used as the fair value (Level 1). The fair values of the other items of fixed-rate debt are determined by discounting the future cash flows at the interest rate prevailing at the year-end. The interest rate spreads used are those of the most recently obtained or refinanced loans.

28.2 Fair values of financial instruments


Comet operates its own subsidiaries in a number of countries and also exports products to still other countries. As an international company, the Group is subject to various financial risks which are inseparable from its business activities. Comet seeks to avoid unreasonable finan-cial risks and to mitigate risks through appropriate hedges. The key elements of risk management form an integral part of Group strategy. Clearly defined management information and control systems are used to measure, monitor and control risks. Detailed risk reports are produced on a regular basis.

The primary goal of capital management is to manage equity and debt capital in such a way as to ensure the Group’s high creditworthi-ness and an equity ratio appropriate to the Group’s risk profile, thus supporting its business activities. Comet manages the Group’s capital structure to meet liquidity requirements and pursue growth and prof-itability targets, taking into account the economic environment and the financial results achieved and planned. On this basis, the Board of Directors proposes dividend payments or capital repayments to the shareholders or recommends increases in capital stock.

Comet monitors and evaluates its capital structure by reference to net debt and the equity ratio, with the aim of ensuring that the capital structure covers the business risks and assures the Group’s lasting financial flexibility.



+ Non-current debt 68,647 72,506

./. Cash and cash equivalents 60,255 43,007

Net debt 25,027 38,967

EBITDA 39,974 42,966

Debt ratio (net debt in relation to EBITDA) 0.6 0.9

Shareholders’ equity 195,948 198,292

Equity ratio (equity in % of total assets) 50.0% 52.1%

1 Debt including lease liabilities. Restated for IFRS 16 (see note 2.2).

Comet is exposed to many risks associated with financial instruments. These can be divided into market risks, credit risks and liquidity risks.

29 Management of financial risks

29.1 Capital management

29.2 Risks in connection with financial instruments


Market risk is the risk of changes in the price of financial assets, in cur-rency exchange rates, interest rates and the price of exchange-traded commodities. As a manufacturer, Comet is inherently exposed to com-modity price risks (for example, for inputs such as energy, copper and ceramics), but these are not considered financial risks for the purposes of IFRS 7, as Comet procures commodities only for use in manufactur-ing, not for trading of commodity contracts. Consequently, these risks are not explicitly determined and are not separately disclosed in the consolidated financial statements.

Exchange rate riskWith its worldwide activities and strong focus on exports, Comet has particularly high exposure to exchange rate risks, as revenues and costs often do not arise in the same currency. The currency risk from operations is reduced by purchasing and selling in local currency where possible, an approach known as natural hedging. In addition, to protect against fluctuation in exchange rates, significant foreign currency orders in the X-Ray Systems division are already hedged on receipt of the order, using forward exchange contracts. The Industrial X-Ray Modules, ebeam Technologies and Plasma Control Technologies divisions non-selectively hedge a large portion of the expected cash flows in foreign currency up to a one-year time horizon, by means of forward exchange contracts. As Comet hedges only cash flows, there are no hedges of net investments in foreign operations. The table below shows the sensitivity of income before tax and of sharehold-ers’ equity to a possible movement in those exchange rates that are material for Comet, with all other variables held constant. The most important monetary foreign currency positions in the balance sheets of the Group companies are in euros and US dollars. The percentages of movement in exchange rates are based on an estimated potential range of fluctuation.

Fiscal year 2019Increase in

exchange rate in %Effect on income

before tax in thou-sands of CHF

Effect on equity in thousands of CHF

EUR / CHF +10 +3,135 +325

USD / CHF +10 +2,571 +726

Fiscal year 2018Increase in

exchange rate in %Effect on income

before tax in thou-sands of CHF 1

Effect on equity in thousands of CHF 1

EUR / CHF +10 +1,272 +1,059

USD / CHF +10 +857 +1,379


29.2.1 Market risk


A reduction in exchange rates by the same percentage amount pro-duces an opposite effect of equal size. The sensitivity analysis covers only monetary balance sheet items that, relative to the functional currency of the respective Group company, are settled in foreign cur-rencies.

Interest rate riskComet’s debt financing exposes it to the risk of interest rate fluctu-ation in the refinancing of current debt. All loans are measured at amortized cost; consequently, in the year under review and the prior year, changes in market interest rates did not have an effect on the carrying amounts of the loans, nor therefore on income before tax or on equity. The fair values of non-current debt, based on the current in-terest rate situation, are presented on an indicative basis in note 28.1.

Credit risk is the risk that a counterparty will not be willing or able to meet its obligations. To mitigate this risk, Comet deals with multiple well-established banks and spreads the credit risk as widely as neces-sary and reasonable.

Banking transactions: Comet spreads its cash holdings among dif-ferent banks in order to minimize the potential for losses from credit risk. Banking transactions are conducted only with reputable banks of national and international standing. The types of transactions in which subsidiaries are permitted to engage is determined centrally. The fol-lowing table shows the amounts held at the most important counter-parties at the balance sheet date:

2019 2018

In thousands of CHF Rating * Balance Rating * Balance

Bank A A+ 25,973 A+ 23,434

Bank B AAA 2,499 AAA 42

Bank C A 6,659 A 2,458

Bank D n/a 4,519 n/a 16

Bank E A- 10,284 A- 6,157

Bank F A+ 5,045 A+ 5,093

Other counterparties 5,276 5,807

Total bank deposits 60,255 43,007

* Long-term credit rating from Standard & Poor’s.

Trade receivables: Comet operates worldwide, selling its products in various countries and to a large number of customers. Payment terms vary according to the market and customer. The credit limits for and payments received from each customer are monitored by the individ-ual Group companies; the resulting information is made available to Group management in the form of monthly special reports. Appropri-ate allowance for expected risk of default is made through the recog-nition of impairment on doubtful accounts. Receivables and contract assets are written off only when payment is highly unlikely to be forthcoming. Detailed information on impairment of receivables and contract assets and its movement in the year can be found in note 13.

29.2.2 Credit risk


The amount of exposure to credit risk equals the carrying amount of the respective financial instruments in the balance sheet.

Comet defines liquidity risk as the risk that, at any time, the Group will not be able to meet its financial obligations fully as they become due. The foremost goal of financial management is the permanent assurance of the Group’s solvency in order to prevent such a contin-gency. To this end, using liquidity planning, Comet always maintains sufficient liquid assets and credit lines to avoid shortages of liquidity. Ensuring solvency also includes active working capital management. The Group’s credit quality is safeguarded by monitoring the leverage ratio of net debt to EBITDA. Liquidity planning and liquidity procure-ment are to a large extent performed centrally for the whole Group. A rolling three-month cash flow forecast is prepared monthly based on a decentralized, bottom-up approach. The long-term financing of subsidiaries is normally arranged through loans of Comet Holding AG. Following is an overview of all contractual payment obligations as at the balance sheet date, on an undiscounted basis:

Fiscal year 2019In thousands of CHF Carrying amount Payments due by period

Total 2020 2021 – 2024 After 2024

Debt 71,893 74,388 13,263 61,125 –

Lease liabilities 13,389 14,493 5,093 7,449 1,950

Financial liabilities 34,398 34,398 34,398 – –

Derivatives with negative fair values 41 41 41 – –

Total 119,722 123,320 52,796 68,574 1,950

29.2.3 Liquidity risk


Fiscal year 2018 1

In thousands of CHF Carrying amount Payments due by period

Total 2019 2020 – 2023 After 2023

Debt 67,812 71,627 6,275 65,352 –

Lease liabilities 14,162 16,296 5,452 10,844 –

Financial liabilities 32,991 32,991 32,991 – –

Derivatives with negative fair values 379 379 379 – –

Total 115,345 121,293 45,098 76,196 –


The item “debt” represents the principal amounts of current and non-current debt as well as the contractual interest payments. The key assumptions of the above summary of payment obligations are: • For variable-rate debt, the interest rates at the balance sheet date are used.

• All amounts denominated in foreign currencies are translated at the rate prevailing at the balance sheet date.

• The maturity date assumed is the earliest possible.

The contract amounts of open derivative positions are presented in note 14.3.


Main elements of the compensation systemThe remuneration of the members of the Executive Committee con-sists of fixed compensation and a performance-based component. The total compensation takes into account the recipient’s position and level of responsibility.

The profit-sharing remuneration of the members of the Executive Committee consists of annually paid compensation under a short-term incentive plan (STIP) and a long-term incentive plan (LTIP). Two-thirds of the compensation under the STIP is paid in cash and one-third of it is paid in stock. The compensation under the LTIP is paid only in stock. The total variable compensation (STIP and LTIP com-bined) is capped by an upper limit. The profit-sharing compensation of employees who are not members of the Executive Committee is paid only in cash.

Share-based compensation of the members of the Board of DirectorsTo ensure the independence of the Board of Directors in its supervision of the Executive Committee, the Board members receive only a fixed retainer, of which two-thirds is paid in cash and one-third is paid in stock. The stock awarded is subject to a holding period of three years during which it cannot be sold.

Share-based compensation of the members of the Executive CommitteeIn addition to the fixed compensation, the members of the Executive Committee can earn a performance-related, STIP pay component, of which one-third is paid in stock. The balance of the STIP amount is paid in cash. Additionally, further stock compensation can be granted, under the LTIP. The stock transferred under the STIP is subject to a holding period of three years from the date of the award. Stock trans-ferred under the LTIP does not have a holding period.

Calculation of grant price for share awardsThe grant price, at which the stock is awarded and transferred to re-cipients, is the average closing market price of the stock in the period between (and excluding) the date of the annual results press confer-ence and the date of the Annual Shareholder Meeting.

Expenses recordedThe expense recognized for share-based payments in the year under review was CHF 0.3 million (prior year: CHF 0.3 million). The amount included CHF 0.1 million for stock already awarded to the Board of Directors in 2019.

30 Share-based payments


The expense for compensation of the members of the Executive Com-mittee and Board of Directors can be analyzed as follows:

in thousands of CHF 2019 2018

Cash compensation, including short-term employee benefits 3,724 4,064

Contributions to post-employment benefit arrangements 387 416

Expense for share-based payments 309 349

Total compensation 4,420 4,830

Related party transactionsIn the fiscal year there were no transactions with related par-ties (prior year: purchase of consulting services in the amount of CHF 8 thousand).

On February 3, 2020, the subsidiary Comet Technologies Malaysia Sdn. Bhd. was founded in Penang, Malaysia. The company is wholly owned by Comet Holding AG. There have been no other events after the bal-ance sheet date with a material effect on the amounts in the consoli-dated financial statements.

The Board of Directors will propose at the Shareholder Meeting to pay shareholders a distribution of CHF 1.00 per share from retained earnings. In the prior year, Comet paid a distribution of CHF 1.00 per share from distributable paid-in capital and of CHF 0.20 per share from retained earnings. The total amount of the proposed distribution is CHF 7.8 million (prior year: CHF 9.3 million).

The Board of Directors released these financial statements on March 12, 2020 for publication. The Board will present the financial statements to the Annual Shareholder Meeting on April 23, 2020 for approval.

31 Compensation of the Board of Directors and Executive Committee

32 Events after the balance sheet date

33 Proposed distribution to shareholders

34 Release of the consolidated financial statements for publication

93Comet Holding AG Report of the statutory auditor

Ernst & Young Ltd Schanzenstrasse 4a P.O. Box CH-3001 Berne

Phone: +41 58 286 61 11 Fax: +41 58 286 68 18 www.ey.com/ch

To the General Meeting of Comet Holding Ltd., Flamatt

Berne, 12 March 2020

Statutory auditor’s report on the audit of the consolidated financial statements

Opinion We have audited the consolidated financial statements of Comet Holding Ltd. and its sub-sidiaries (the Group), which comprise the consolidated statement of financial position as at 31 December 2019 and the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of cash flows and consolidated statement of changes in equity for the year then ended, and notes to the consolidated financial state-ments, including a summary of significant accounting policies. In our opinion, the consolidated financial statements (pages 35 to 92) give a true and fair view of the consolidated financial position of the Group as at 31 December 2019, and its con-solidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.

Basis for opinion We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Auditing Standards. Our responsibilities under those provisions and stan-dards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the provisions of Swiss law and the re-quirements of the Swiss audit profession, as well as the IESBA Code of Ethics for Professio-nal Accountants, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters Key audit matters are those matters that, in our professional judgment, were of most signifi-cance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond

94 Report of the statutory auditor

to our assessment of the risks of material misstatement of the consolidated financial state-ments. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the consolidated financial state-ments.

Impairment of intangible assets – goodwill and other

Risk The group reviews the carrying amount of its cash generating units annually or more frequently if any impairment indicators are present with respect to goodwill or other intangible assets with indefinite useful life (trademarks). The impairment assessment involves performing a comparison of the estimated recoverable amount (fair value or higher net present value of each cash-generating unit) to its carrying amount. These annual impairment tests were significant to our audit because the balances for goodwill and trademarks of CHF 27.6 million as of 31 December 2019 are material to the financial statements. Furthermore, the underlying estimations to the impairment assessment are complex and any impairment of goodwill, trademarks or other intangible and tangible assets can have a material impact on the net income of the Comet Group. The valuation also depends on assumptions regarding the future development of the business and on judgments made by management. The impairment tests are complex and described in Note 20. The recoverable amount calculated via discounted cash flow analysis that is based on various assumptions such as future cash flows, terminal value growth rates, inflation rate and discount rate (WACC) of each cash-generating unit. These assumptions are determined by management and are therefore considered to be material judgments.

Our audit approach

We assessed the assumptions made in the impairment tests and involved our own valuation specialists to test the accuracy of the impairment calculation. We compared the terminal value growth rate as well as the inflation rate with externally available data and also checked the clerical accuracy of the model. In addition, we evaluated the estimates made by management in previous years in terms of the actual income generated, as well as assessed management’s process for identifying possible impairments. Moreover, we evaluated the disclosures regarding impairment testing on goodwill and intangible assets with indefinite useful life with regard to the assumptions made. Our audit procedures did not lead to any reservations concerning the measurement of intangible assets – goodwill and other.


Recognition of provisions resulting from claims

Risk As outlined in notes 24 and 27.1 of the consolidated financial state-ments, Comet is exposed to potential claims and litigation in a variety of areas and counterparties. These areas include a former owner of a group company, tax authorities, other authorities and other third parties. Provisions, particularly for individual claims made against Comet, involve a high level of judgment as it is often uncertain if, when and to what extent such claims result in cash outflows. A provision has been raised based on management’s best estimate of the likely outflow.

Our audit approach

We assessed Comet’s process for identifying and monitoring new or pending claims. We inquired with both financial and legal staff, as well as outside attorneys that were engaged by Comet. Moreover, we read minutes of the Board of Directors and the Audit Committee and discussed open cases with management. Finally, we read legal letters that were provided by external attorneys or other parties that supported Comet in such cases. For recurring claims such as warranties, we assessed the provision based on the historical accuracy to assess the amount recorded in the current year. We also assessed the accounting for any change in the current year. Our audit procedures did not lead to any reservations concerning the completeness and measurement of the provisions resulting from claims.

Other information in the annual report The Board of Directors is responsible for the other information in the annual report. The other information comprises all information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial statements, the remuneration report and our auditor’s reports thereon. Our opinion on the consolidated financial statements does not cover the other information in the annual report and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information in the annual report and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our know-ledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibility of the Board of Directors for the consolidated financial statements The Board of Directors is responsible for the preparation of the consolidated financial state-ments that give a true and fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. A further description of our responsibilities for the audit of the consolidated financial state-ments is located at the website of EXPERTsuisse: http://www.expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report.

Report on other legal and regulatory requirements In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors. We recommend that the consolidated financial statements submitted to you be approved.

Ernst & Young Ltd

ROLAND RUPRECHT PHILIPPE WENGER Licensed audit expert Licensed audit expert (Auditor in charge)

Separate Financial Statements of Comet Holding AG98

Separate Financial Statements of Comet Holding AG

99 Statement of income 99 Balance sheet 100 Notes to the separate financial statements of Comet Holding AG 107 Board of Directors’ proposal for the appropriation of retained earnings 108 Report of the statutory auditor

Contents

Separate Financial Statements of Comet Holding AG 99Comet Holding AG

In thousands of CHF 2019 % 2018 %

Dividend income 15,855 20,164

Other financing income 2,434 2,612

Total income 18,289 100.0% 22,776 100.0%

Financing expenses (1,254) (2,255)

Other operating expenses (2,873) (2,842)

Amortization of rights to trademarks and names, FeinFocus – (523)

Income tax (118) –

Total expenses (4,245) 23.2% (5,620) 24.7%

Net income for the year 14,044 76.8% 17,156 75.3%

Balance sheet

In thousands of CHF Note Dec. 31, 2019 % Dec. 31, 2018 %

AssetsCash and cash equivalents 455 114

Trade receivables from subsidiaries 3 14

Prepaid expenses 115 196

Total current assets 573 0.3% 324 0.2%

Non-current financial assets - loans 3 118,466 113,484

Investments in subsidiaries 2 75,431 75,431

Intangible assets – –

Total non-current assets 193,897 99.7% 188,915 99.8%

Total assets 194,470 100.0% 189,239 100.0%

Liabilities and shareholders’ equityCurrent trade payables to non-Group entities 4 106

Current trade payables to shareholders and governing bodies 297 262

Accrued expenses 1,346 1,232

Non-current interest-bearing liabilities 8 60,000 60,000

Total liabilities 61,647 31.7% 61,600 32.6%

Capital stock 5 7,764 7,760

Statutory capital reserve 1,093 8,434

Statutory earnings reserve 4,967 4,967

Retained earnings brought forward 104,955 89,323

Net income for the year 14,044 17,156

Total retained earnings 118,999 106,479

Total shareholders’ equity 132,823 68.3% 127,639 67.4%

Total liabilities and shareholders’ equity 194,470 100.0% 189,239 100.0%

Statement of income


Comet Holding AG has its registered office in Flamatt, Switzerland and is the Comet Group’s parent holding company listed on the Swiss stock exchange. The separate financial statements of Comet Holding AG at and for the year ended December 31, 2019 comply with the pro-visions of the Swiss Code of Obligations. The manner of the inclusion of Comet Holding AG in the consolidated accounts is governed by the measurement principles set out in the notes to the consolidated finan-cial statements.

These separate financial statements were prepared in accordance with the principles of the applicable Swiss Accounting Law (Title 32 of the Swiss Code of Obligations).

Receivables and loansReceivables and loans are stated at nominal amounts less any neces-sary write-downs.

Non-current financial assets and investments in subsidiariesInvestments in subsidiaries are recognized at historical cost less neces-sary impairment; they are individually tested annually for impairment.

Comet Holding AG directly held the following companies at December 31, 2019:

Company Registered office Currency Capital stock Equity interest in % *

2019 2018

Comet Holding AGFlamatt, Switzerland CHF 7,764,208 100% 100%

Comet AGFlamatt, Switzerland CHF 2,000,000 100% 100%

Comet Electronics (Shanghai) Co. Ltd. Shanghai, China CNY 5,466,148 100% 100%

Comet Mechanical Equipment (Shanghai) Co. Ltd. Shanghai, China CNY 1,655,420 100% 100%

Comet Technologies USA, Inc. Shelton, CT, USA USD 1,000 100% 100%

Comet Technologies Korea Co. Ltd. Suwon, Korea KRW 500,000,000 100% 100%

Yxlon International GmbH Hamburg, Germany EUR 110,000 100% 100%

Yxlon International A/S Taastrup, Denmark DKK 601,000 100% 100%

Yxlon International KK Yokohama, Japan JPY 10,000,000 100% 100%

Yxlon (Beijing) X-Ray Equipment Trading Co. Ltd. Beijing, China CNY 1,077,000 100% 100%

* Comet Holding AG also holds 100% of the voting rights in all companies.

General information

1 Accounting principles

2 Investments in subsidiaries

Notes to the separate financial statements of Comet Holding AG


Loans to subsidiaries were as follows:


Comet AG 76,089 71,555

Comet Technologies USA, Inc. 20,209 22,153

Yxlon International GmbH 19,399 16,785

Yxlon International A/S 1,522 2,991

Yxlon International KK 1,247 –

Total loans to subsidiaries 118,466 113,484

Comet Holding AG (the “Company”) is the Group’s only company listed on a stock exchange. The Company’s registered office is in Flamatt, Switzerland. The registered shares of Comet Holding AG have been listed in the main market segment of the SIX Swiss Exchange in Zurich since December 17, 2002.

Ticker symbol COTN

Security number 36082699

ISIN CH0360826991

Closing price at December 31, 2019 CHF 122.60

Market capitalization at December 31, 2019 CHF 952 million

Assorted data on the stock of Comet Holding AG is provided on page 32 of the annual report.

Listed and non-listed Group companiesComet Holding AG has no publicly traded subsidiaries. The companies consolidated in the Comet Group are presented in note 2, “Invest-ments in subsidiaries”.

Registered shareholdersAt December 31, 2019, Comet Holding AG had 3,932 voting sharehold-ers of record (i.e., voting shareholders registered in the share register; prior year: 5,121). Of the total issued registered stock, 100% (prior year: 100%) represented free float. Comet Holding AG held no trea-sury stock at December 31, 2019 (prior year: nil). The structure of share ownership size classes among the shareholders of record at December 31, 2019 was as follows:

Number of shares Number of shareholders 1 to 1,000 3,558

1,001 to 10,000 325

10,001 to 50,000 38

50,001 to 100,000 7

More than 100,000 4

This analysis includes only the stock of shareholders who were regis-tered in the share register. At December 31, 2019 the shares of unregis-tered owners amounted to 31% of the total (prior year: 27%).

3 Non-current financial assets – loans

4 Listing and shareholders


Significant shareholders Ownership interests in companies domiciled in Switzerland whose shares are listed at least partly in Switzerland must be notified both to the issuer company and to the SIX Swiss Exchange when the hold-er’s voting rights reach, increase above or fall below certain thresholds. These notification thresholds are 3%, 5%, 10%, 15%, 20%, 25%, 33 ⅓%, 50% and 66 ⅔ % of voting rights. The relevant details are set out in the Swiss Stock Exchange Act (BEHG) and in the Ordinance of the Swiss Financial Market Supervisory Authority on Stock Exchanges and Secu-rities Trading (the FINMA Stock Exchange Ordinance).

At December 31, 2019 the Company, according to disclosure notifica-tions, had the following significant shareholders (defined for this pur-pose as shareholders with voting rights in excess of 3% of the Comet capital stock recorded in the Swiss commercial register of companies):

Beneficial owner Direct shareholder Share of voting rights

as disclosed by shareholders

Haldor Foundation Tringle Investment Pte Ltd 10.13%

N/AVERAISON SICAV – Engagement Fund 9.99%

Pictet Asset Management SA (Direction de Fonds) 5.07%

UBS Fund Management (Switzerland AG) 3.63%

The Company has not been notified of nor is aware of any other shareholders that held more than 3% of its shares. To the best of the Company’s knowledge there were no voting pool agreements.

Reportable changes during fiscal year 2019 In the fiscal year, three reportable announcements were published. For a complete list of all announcements under section 20 BEHG, refer to the publication platform of the disclosure section of the SIX Swiss Exchange: www.six-exchange-regulation.com/en/home/publications/significant-shareholders.html

Cross-shareholdings There were no cross-shareholdings with other publicly traded companies.


Capital stockThe capital stock at January 1, 2019 was CHF 7,759,882, divided into 7,759,882 registered shares with a par value of CHF 1.00 per share.

In fiscal year 2019 the capital stock was increased by 4,326 shares from the portion of authorized capital designated for equity-based com-pensation. Including the increase of 4,326 shares from this portion of authorized capital, Comet Holding AG at December 31, 2019 thus had a new total of CHF 7,764,208 of capital stock, divided into 7,764,208 registered shares with a par value of CHF 1.00 per share. The capital stock is fully paid in.

At its meeting on August 9, 2019 the Board of Directors established that the capital increase from authorized capital for equity-based compensation was properly performed. The information in the com-mercial register, and the Bylaws of Comet Holding AG, were updated to reflect the change in capital stock.

2019 2018

Number of shares

Par value in CHF

Number of shares

Par value in CHF

January 1 7,759,882 7,759,882 7,753,658 7,753,658

Increase in capital from the portion of authorized capital designated for equity compensation 4,326 4,326 6,224 6,224

December 31 7,764,208 7,764,208 7,759,882 7,759,882

At the balance sheet date, Comet Holding AG held no treasury stock (prior year: nil).

Authorized capital for equity compensationUnder section 3b of its Bylaws, a portion of the Company’s unissued authorized capital is designated for use only as equity-based compen-sation (in German this portion is known as “bedingtes Aktienkapital”). In such a capital increase, stock is issued to Executive Committee members and / or Board members of Comet Holding AG. With respect to this portion of authorized capital, the other shareholders’ pre-emp-tive rights are excluded. The issuance of stock or stock subscription rights is based on a compensation plan (in the form of a written regu-lation) adopted by the Board of Directors.

In May 2019, in accordance with the compensation plan, the members of the Board of Directors were granted a total of 1,679 shares of stock in payment of CHF 153,948 of fixed retainers due for fiscal year 2018. In addition, as part of their compensation for 2019, the members of the Board of Directors were granted a total of 835 shares in payment of CHF 76,561 of fixed retainers due for the period from January 1, 2019 to the 2019 Annual Shareholder Meeting. The fully paid shares were applied to the retainers due at a price of CHF 91.69 per share.

5 Equity capital structure


Members of the Executive Committee were granted a total of 1,812 shares in payment of CHF 166,142 of profit-sharing compensation due for fiscal year 2019. The fully paid shares were applied to the compen-sation due at a price of CHF 91.69 per share.

As a result of these grants of a total of 4,326 shares made in 2019, the Company’s unissued authorized capital for equity-based compensa-tion showed the following movement:

2019 2018

Number of shares

Par value in CHF

Number of shares

Par value in CHF

January 1 203,238 203,238 209,462 209,462

Increase in capital (awards to Board of Directors for prior term’s retainer and to Executive Committee for prior year’s profit-shar-ing compensation) (4,326) (4,326) (6,224) (6,224)

December 31 198,912 198,912 203,238 203,238

At the end of the year, the remaining unissued authorized capital for equity-based compensation was CHF 198,912, or 2.6% of the existing capital stock.

Authorized capital for other capital increasesAt December 31, 2019, in addition to shares outstanding and to unissued authorized capital for equity-based compensation, the Company had unissued authorized capital for purposes set out in section 3a of the By-laws (in German: “genehmigtes Aktienkapital”). The Board of Directors is authorized, at any time until April 26, 2020, to increase the capital stock by a maximum of CHF 1.4 million by issuing up to 1,400,000 fully payable registered shares with a par value of CHF 1.00 per share, which represents 18% of the existing capital stock. Increases by way of firm commitment underwriting and increases by part of the total authorized amount are permitted. The amount of the respective issue, the date when entitlement to dividend commences, the terms of any exercise of pre-emptive rights and the nature of the contributions are determined by the Board of Directors.

The Board of Directors is authorized to exclude shareholders’ sub-scription rights and assign these rights to third parties if the shares in question are to be used for the acquisition of companies via equity swaps or to finance the cash purchase of companies or parts of com-panies, or to finance new investment projects of Comet Holding AG, or for providing an ownership interest to an industrial partner (either in order to cement a strategic alliance or in the event of a takeover offer for the Company). Stock for which pre-emptive rights are granted but not exercised must be sold by the Company at market prices.


The ownership interests in Comet Holding AG held by current mem-bers of the Board of Directors and Executive Committee are disclosed below. This disclosure includes all persons who held positions on the Board of Directors or Executive Committee for all or part of the year under review, regardless of whether they still did so at the balance sheet date. The shareholdings shown include those of respective related parties.

Total number of shares Of which: number of shares subject to holding periods ending on

Freely disposable

Share of voting rights

2019 2018 4/20/2020 4/26/2021 4/26/2022 2019 2018

Hans Hess Chairman of the Board (until April 25, 2019) 37,941 37,222 543 489 719 36,190 0.5% 0.5%

Heinz Kundert Chairman of the Board (since April 25, 2019) / Chief Executive Officer (since June 21, 2019) 3,564 – – – – 3,564 0.0% –

Lucas A. Grolimund Vice Chairman and member of the Board (until April 25, 2019) 10,224 9,865 271 244 359 9,350 0.1% 0.1%

Rolf Huber Vice Chairman (since April 25, 2019) and member of the Board 13,964 13,605 271 244 359 13,090 0.2% 0.2%

Gian-Luca Bona Member of the Board 6,024 5,665 271 244 359 5,150 0.1% 0.1%

Mariel Hoch Member of the Board 874 515 271 244 359 – 0.0% 0.0%

Franz Richter Member of the Board 874 515 271 244 359 – 0.0% 0.0%

René Lenggenhager Chief Executive Officer (until June 21, 2019) 6,452 6,024 – 461 322 5,669 0.1% 0.1%

Markus Portmann Chief Financial Officer (until May 31, 2019) 1,182 2,943 709 357 116 – 0.0% 0.0%

Thomas WenzelPresident of X-Ray Systems division (since December 1, 2018) 73 73 – – – 73 0.0% 0.0%

Michael KammererPresident of PlasmaControl Technologies division 1,469 1,877 691 656 122 – 0.0% 0.0%

Stephan HaferlPresident of X-Ray Modules division (since January 1, 2018) 277 151 – – 104 173 0.0% 0.0%

Eric Dubuis Chief Information Officer 1,353 1,170 504 279 90 480 0.0% 0.0%

Prisca Hafner CHRO (until June 21, 2019) 100 180 – – 100 – 0.0% 0.0%

The Board members Patrick Jany and Christoph Kutter (who both joined the Board on April 25, 2019) and the 2019 interim CFO Beat Malacarne did not own stock of Comet Holding AG at December 31, 2019.

6 Disclosure of shareholdings of the Board of Directors and Executive Committee


Each 10,000 registered shares of Comet Holding AG, of a par value of CHF 1.00 per share, represented 0.1288% of all voting power (prior year: 0.1289%). The members of the Board of Directors and Executive Committee held an aggregate total of 1.1% of voting rights (prior year: 1.1%). No material changes in ownership interests arose after the bal-ance sheet date of December 31, 2019.

Comet Holding AG has not issued any conversion rights or stock options.

In fiscal year 2019 and the prior year, Comet Holding AG held no treasury stock.

On April 20, 2016, Comet Holding AG issued a bond in the amount of CHF 60 million (denomination: CHF 5,000). The term of the bond is five years and it matures on April 20, 2021. The fixed coupon over the term is 1.875%, payable annually on April 20.

Listing: SIX Swiss Exchange (security number 32 061 943, ISIN number CH0320619437, ticker symbol COT16).

The Group is taxed as a single entity for purposes of value-added taxa-tion, and Comet Holding AG therefore has joint and several liability for the value-added tax obligations of its Swiss subsidiary.

The annual average number of full-time equivalents in 2019 and 2018 was less than 10.

On February 3, 2020, the subsidiary Comet Technologies Malaysia Sdn. Bhd. was founded in Penang, Malaysia. The company is wholly owned by Comet Holding AG. There have been no other events after the bal-ance sheet date with a material effect on the amounts in the financial statements.

The Board of Directors released these annual financial statements on March 12, 2020 for publication and will present them to shareholders for approval at the Annual Shareholder Meeting on April 23, 2020.

7 Options, conversion rights and treasury stock

8 Bond

9 Guarantees and pledged assets

10 Number of full-time equivalents

11 Events after the balance sheet date

12 Release of the separate financial statements for publication


In thousands of CHF 2019

Earnings brought forward 104,955

Net income for the year 14,044

Retained earnings available for distribution 118,999

At the Annual Shareholder Meeting the Board of Directors will propose to pay a dividend of CHF 1.00 per share from retained earnings.

Provided this dividend is approved, it will result in the following movement in retained earnings:

In thousands of CHF 2019

Retained earnings at December 31, 2019 118,999

Dividend payment of CHF 1.00 per share (7,764)

Retained earnings carried forward 111,235

Provided the proposal is approved, the dividend of CHF 1.00 per entitled share will be paid on April 29, 2020 with deduction of Swiss withholding tax.

1 2019 retained earnings

2 Proposal for the appropriation of retained earnings

Board of Directors’ proposal for the appropriation of retained earnings


Ernst & Young Ltd Schanzenstrasse 4a P.O. Box CH-3001 Berne

Phone: +41 58 286 61 11 Fax: +41 58 286 68 18 www.ey.com/ch

To the General Meeting of Comet Holding Ltd., Flamatt

Berne, 12 March 2020

Report of the statutory auditor on the financial statements As statutory auditor, we have audited the financial statements of Comet Holding Ltd., which

comprise the balance sheet, income statement and notes (pages 99 to 106), for the year ended 31 December 2019.

Board of Directors’ responsibility The Board of Directors is responsible for the preparation of the financial statements in accor-dance with the requirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reason-able in the circumstances.

Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and dis-closures in the financial statements. The procedures selected depend on the auditor’s judg-ment, including the assessment of the risks of material misstatement of the financial state-ments, whether due to fraud or error. In making those risk assessments, the auditor consi-ders the internal control system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements for the year ended 31 December 2019 comply with Swiss law and the company’s articles of incorporation.


Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight Authority Key audit matters are those matters that, in our professional judgment, were of most signifi-cance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that con-text. We have fulfilled the responsibilities described in the Auditor’s responsibility section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures per-formed to address the matters below, provide the basis for our audit opinion on the financial statements.

Impairment of investments and loans

Risk As the parent company of the Group, the company holds investments in various subsidiaries. Furthermore, the parent company uses intragroup loans to fund a number of subsidiaries. Investments and loans each amount to approx. 40% resp. 60% of total assets and are therefore material. By definition, amounts recognized on the balance sheet are subject to an impairment risk. When there are indications of possible impairments, management prepares the required calculations and, if applicable, records a depreciation or allowance. The calculations are based in part on simplified principles, especially when management considered the risk of an impairment to be low.

Our audit approach

We reviewed the calculations performed by management, which were based on statutory financial statements or assessments in connection with the consolidated financial statements. For more complex cases, we involved our valuation specialists in checking particularly the plausibility of the discount rates used. Our audit procedures did not lead to any reservations concerning the measurement of the investments and loans.


Report on other legal requirements We confirm that we meet the legal requirements on licensing according to the Auditor Over-sight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence. In accordance with article 728a para. 1 item 3 CO and Swiss Auditing Standard 890, we con-firm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the Board of Directors. We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.

Ernst & Young Ltd

ROLAND RUPRECHT PHILIPPE WENGER Licensed audit expert Licensed audit expert (Auditor in charge)

Comet Group Consolidated Financial Statements · Comet Group Consolidated Financial Statements....

Documents

Transcript of Comet Group Consolidated Financial Statements · Comet Group Consolidated Financial Statements....